Nace Manutacturing Company leased a piece of nonspecialized equipment for use in its operations from Righteous Leasing on January 1, 2019. The 10 year lease requires lease payments of $6,500, beginning on January 1, 2019, and at each December 31 thereafter through 2027. The equipment is estimated to have a 10 year ife, is depreciated on the straight- line basis and will have no residual value at the end of the lease term. Nace's incremental borrowing rate is 7%. Initial direct costs of $1.600 are incurred by the lessee on January 1, 2019. Righteous Leasing acquired the asset just prior to the lease term at a cost of $49.903. Colection of all lease payments is reasonably assured. What is the reduction in the lease liability recorded with the first and second lease payments, respectively? OA. $5,045, S5,045 OB. $6,500; $3,536 OC. $3,419, $3,180 D. $45,430; $3,320

Nace Manutacturing Company leased a piece of nonspecialized equipment for use in its operations from Righteous Leasing on January 1, 2019. The 10 year lease requires lease payments of $6,500, beginning on January 1, 2019, and at each December 31 thereafter through 2027. The equipment is estimated to have a 10 year ife, is depreciated on the straight- line basis and will have no residual value at the end of the lease term. Nace's incremental borrowing rate is 7%. Initial direct costs of $1.600 are incurred by the lessee on January 1, 2019. Righteous Leasing acquired the asset just prior to the lease term at a cost of $49.903. Colection of all lease payments is reasonably assured. What is the reduction in the lease liability recorded with the first and second lease payments, respectively? OA. $5,045, S5,045 OB. $6,500; $3,536 OC. $3,419, $3,180 D. $45,430; $3,320

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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