Question

Lessee Company enters into a lease on January 1, 2021, that is accounted for as a...

Lessee Company enters into a lease on January 1, 2021, that is accounted for as a finance lease. The lease calls for quarterly payments of $20,000, beginning on January 1, 2021, and continuing for 5 years. The last payment is due on October 1, 2025. The lease has an implicit annual interest rate of 9%. The present value of an annuity due at 9% per period for 5 periods is 4.240; the present value of an annuity due at 2.25% per period for 20 periods is 16.323. What amount will Lessee report as a lease payable (not including accrued interest) in its financial statements dated December 31, 2021?

Multiple Choice

  • $266,255

  • $326,460

  • $423,972

  • $252,246

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Answer #1

Option is Correct = $266255

amount of lease payable = Quarterly payment * PVAD(2.25%,20)

amount of lease payable = 20000 * 16.323

amount of lease payable as on January 1 2021= 326460

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