Question

Francisco leased equipment from Julio on December 31, 2021. The lease is a 10-year lease with...

Francisco leased equipment from Julio on December 31, 2021. The lease is a 10-year lease with annual payments of $155,000 due on December 31 of each year beginning December 31, 2021. The present value of the lease payments is $1,123,268. Francisco's incremental borrowing rate is 10% for this type of lease. The implicit rate of 8% is known by the lessee. What should be the balance in Francisco lease liability at December 31, 2022?

Multiple Choice

  • $968,268.

  • $897,239.

  • $885,729.

  • $890,729.

THANKS

Homework Answers

Answer #1
particulars amount  
present value of lease payment $ 11,23,268.00
less annaul lease payment made oin31.12.2021 $ (1,55,000.00)
value as on 31.12.2021 $    9,68,268.00
interest@8% $       77,461.44
total value $ 10,45,729.44
less annaul lease payment made oin31.12.2022 $ (1,55,000.00)
value as on 31.12.2022 $    8,90,729.
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