On 1 January 20X6 Fellini hired a machine under a finance lease. The cash price of the machine was $3.5 million and the present value of the minimum lease payments was $3.3 million. Instalments of $700,000 are payable annually in advance with the first payment made on 1 January 20X6. The interest rate implicit in the lease is 6%. What amount will appear under non-current liabilities in respect of this lease in the statement of financial position of Fellini at 31 December 20X7? A $1,479,000 B $2,179,000 C $1,702,000 D $2,266,000

Essentials Of Investments
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ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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On 1 January 20X6 Fellini hired a machine under a finance lease. The cash price of the machine was

$3.5 million and the present value of the minimum lease payments was $3.3 million. Instalments of $700,000

are payable annually in advance with the first payment made on 1 January 20X6. The interest rate implicit in

the lease is 6%.

What amount will appear under non-current liabilities in respect of this lease in the statement of financial

position of Fellini at 31 December 20X7?

A $1,479,000

B $2,179,000

C $1,702,000

D $2,266,000

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