Leewin Brokerage enters into a lease agreement with Bumble Motors to lease an automobile with a fair value of $77,000 under a 5-year lease on December 20, 2022. The lease commences on January 1, 2023, and Leewin will return the automobile to Bumble on December 31, 2027. The automobile has an estimated useful life of 7 years. Leewin made a lease payment of $10,900 on December 20, 2022. In addition, the lease agreement stipulates annual payments of $10,900, due on January 1 of 2023, 2024, 2025, 2026, and 2027. The implicit rate of the lease is 7% and is known by Leewin. There is no purchase option, no lease incentives, no residual value guarantees, and no transfer of ownership. Leewin incurs initial direct costs of $1200.Assuming that this is classified as an operating lease, what is the amount of the lease liability on January 1, 2023 before the lease payment? Group of answer choices $44,692 $64,200 $45,892 $47,821
Leewin Brokerage enters into a lease agreement with Bumble Motors to lease an automobile with a fair value of $77,000 under a 5-year lease on December 20, 2022. The lease commences on January 1, 2023, and Leewin will return the automobile to Bumble on December 31, 2027. The automobile has an estimated useful life of 7 years. Leewin made a lease payment of $10,900 on December 20, 2022. In addition, the lease agreement stipulates annual payments of $10,900, due on January 1 of 2023, 2024, 2025, 2026, and 2027. The implicit rate of the lease is 7% and is known by Leewin. There is no purchase option, no lease incentives, no residual value guarantees, and no transfer of ownership. Leewin incurs initial direct costs of $1200.Assuming that this is classified as an operating lease, what is the amount of the lease liability on January 1, 2023 before the lease payment? Group of answer choices $44,692 $64,200 $45,892 $47,821
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter20: Accounting For Leases
Section: Chapter Questions
Problem 2E: Lessee Accounting with Payments Made at Beginning of Year Adden Company signs a lease agreement...
Related questions
Question
Leewin Brokerage enters into a lease agreement with Bumble Motors to lease an automobile with a fair value of $77,000 under a 5-year lease on December 20, 2022. The lease commences on January 1, 2023, and Leewin will return the automobile to Bumble on December 31, 2027. The automobile has an estimated useful life of 7 years. Leewin made a lease payment of $10,900 on December 20, 2022. In addition, the lease agreement stipulates annual payments of $10,900, due on January 1 of 2023, 2024, 2025, 2026, and 2027. The implicit rate of the lease is 7% and is known by Leewin. There is no purchase option, no lease incentives, no residual value guarantees, and no transfer of ownership. Leewin incurs initial direct costs of $1200.
Assuming that this is classified as an operating lease, what is the amount of the lease liability on January 1, 2023 before the lease payment?
Assuming that this is classified as an operating lease, what is the amount of the lease liability on January 1, 2023 before the lease payment?
Group of answer choices
$44,692
$64,200
$45,892
$47,821
AI-Generated Solution
AI-generated content may present inaccurate or offensive content that does not represent bartleby’s views.
Unlock instant AI solutions
Tap the button
to generate a solution
Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning