Nice Manufacturing Company leased a piece of nonspecialized equipment for use in its operations from Righteous Leasing on January 1, 2023. The 10 year lease requires lease payments of $9500, beginning on January 1, 2023, and at each December 31 thereafter through 2031. The equipment is estimated to have a 10 year life, is depreciated on the straight-line basis and will have a $2000 residual value at the end of the lease term on December 31, 2032, which is guaranteed by Nice. Nice's incremental borrowing rate is 7%. Initial direct costs of $2500 are incurred on January 1, 2023. Righteous Leasing acquired the asset just prior to the lease term at a cost of $64,012. Collection of all lease payments is reasonably assured.What is the amount of the lease liability recorded by Nice at the lease's commencement? Group of answer choices $67,741 $22,500 $74,912 $72,412
Nice Manufacturing Company leased a piece of nonspecialized equipment for use in its operations from Righteous Leasing on January 1, 2023. The 10 year lease requires lease payments of $9500, beginning on January 1, 2023, and at each December 31 thereafter through 2031. The equipment is estimated to have a 10 year life, is depreciated on the straight-line basis and will have a $2000 residual value at the end of the lease term on December 31, 2032, which is guaranteed by Nice. Nice's incremental borrowing rate is 7%. Initial direct costs of $2500 are incurred on January 1, 2023. Righteous Leasing acquired the asset just prior to the lease term at a cost of $64,012. Collection of all lease payments is reasonably assured.What is the amount of the lease liability recorded by Nice at the lease's commencement? Group of answer choices $67,741 $22,500 $74,912 $72,412
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...
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Question
Nice Manufacturing Company leased a piece of nonspecialized equipment for use in its operations from Righteous Leasing on January 1, 2023. The 10 year lease requires lease payments of $9500, beginning on January 1, 2023, and at each December 31 thereafter through 2031. The equipment is estimated to have a 10 year life, is depreciated on the straight-line basis and will have a $2000 residual value at the end of the lease term on December 31, 2032, which is guaranteed by Nice. Nice's incremental borrowing rate is 7%. Initial direct costs of $2500 are incurred on January 1, 2023. Righteous Leasing acquired the asset just prior to the lease term at a cost of $64,012. Collection of all lease payments is reasonably assured.
What is the amount of the lease liability recorded by Nice at the lease's commencement?
What is the amount of the lease liability recorded by Nice at the lease's commencement?
Group of answer choices
$67,741
$22,500
$74,912
$72,412
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