What is the carrying value of the lease liability on Reagan's December 31, 2010 balance sheet (after the third lease payment is made)?
A)$280,531
B)$190,530
C)$266,280
D)$356,280

Question

Quizplus · Accepted Answer

The carrying value of the lease liability is the present value of the remaining lease payments. The lease payment is $10,000 per year for 4 years, starting on January 1, 2010. The discount rate is 10%. The present value of the remaining lease payments is:PV = $10,000 * (1 - (1 + 0.1)^-1) / 0.1 = $280,531

What Is the Carrying Value of the Lease Liability on Reagan's