On January 1, 2021, Variety Company entered into an 8-year lease of a floor of a buildin with useful life of 15 years with the following terms: Annual rental for the first two years payable at the end of each year Annual rental for the next five years payable at the end of each year Implicit interest rate PV of an ordinary annuity of 1 at 10% for two periods PV of an ordinary annuity of 1 at 10% for five periods PV of 1 at 10% for three periods 500,000 600,000 8% 1.78 3.99 0.75
On January 1, 2021, Variety Company entered into an 8-year lease of a floor of a buildin with useful life of 15 years with the following terms: Annual rental for the first two years payable at the end of each year Annual rental for the next five years payable at the end of each year Implicit interest rate PV of an ordinary annuity of 1 at 10% for two periods PV of an ordinary annuity of 1 at 10% for five periods PV of 1 at 10% for three periods 500,000 600,000 8% 1.78 3.99 0.75
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 6E: Lessor Accounting Issues Ramsey Company leases heavy equipment to Terrell Inc. on March 1, 2019, on...
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Question
What is the lease liability on January 1, 2021?
a. 2,394,000
b. 2,948,840
c. 3,261,245
d. 2,058,840
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