N Corp. entered into a nine-year capital lease on a warehouse on December 31, 2013. Lease payments of $34,000, which includes real estate taxes of $1,500, are due annually, beginning on December 31, 2014, and every December 31 thereafter. N Corp. does not know the interest rate implicit in the lease; N's incremental borrowing rate is 11%. The rounded present value of an ordinary annuity for nine years at 11% is 6. What amount should N report as capitalized lease liability at December 31, 2013? a. $204,000. b. $292,500. c. $195,000. d. $306,000.
N Corp. entered into a nine-year capital lease on a warehouse on December 31, 2013. Lease payments of $34,000, which includes real estate taxes of $1,500, are due annually, beginning on December 31, 2014, and every December 31 thereafter. N Corp. does not know the interest rate implicit in the lease; N's incremental borrowing rate is 11%. The rounded present value of an ordinary annuity for nine years at 11% is 6. What amount should N report as capitalized lease liability at December 31, 2013? a. $204,000. b. $292,500. c. $195,000. d. $306,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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