Carla Salons leased equipment from SmithCo on July 1, 2013. The present value of the lease payments discounted at 10% was $80,000. Ten annual lease payments of $12,000 are due at the beginning of each fiscal year beginning July 1, 2013. SmithCo had constructed the equipment recently for $66,000, and its retail fair value was $100,000. Its estimated useful life was 16 years. Following the guidance of the new ASU, the total decrease in earnings (pretax) in Carla's December 31, 2013 income statement would be:

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The Answer of Carla Salons leased equipment from SmithCo on July 1, 2013. The present value of the lease payments discounted at 10% was $80,000. Ten annual lease payments of $12,000 are due at the beginning of each fiscal year beginning July 1, 2013. SmithCo had constructed the equipment recently for $66,000, and its retail fair value was $100,000. Its estimated useful life was 16 years. Following the guidance of the new ASU, the total decrease in earnings (pretax) in Carla's December 31, 2013 income statement would be:

Carla Salons Leased Equipment from SmithCo on July 1, 2013