On December 31, 2019, Barton, Inc. leased lab equipment with a fair value of $1,650,000 from Banner Rentals Co. The agreement is a six-year noncancelable lease requiring annual payments of $328,600 beginning December 31, 2019. The unguaranteed residual value is $200,000, but Barton expects the equipment to be worth $0 at the end of the lease. The lease is appropriately accounted for by Barton as a finance lease. Barton's incremental borrowing rate is 10%. Barton does not know the interest rate implicit in the lease payments is 11%. The present value of an annuity due of 1 for 6 years at 10% is 4.7908. The present value of an annuity due of 1 for 6 years at 11% is 4.6959. The present value of 1 for 6 years at 10% is 0.56447. The present value of 1 for 6 years at 11% is 0.53464. In its December 31, 2019 balance sheet, Barton should report a lease liability of

On December 31, 2019, Barton, Inc. leased lab equipment with a fair value of $1,650,000 from Banner Rentals Co. The agreement is a six-year noncancelable lease requiring annual payments of $328,600 beginning December 31, 2019. The unguaranteed residual value is $200,000, but Barton expects the equipment to be worth $0 at the end of the lease. The lease is appropriately accounted for by Barton as a finance lease. Barton's incremental borrowing rate is 10%. Barton does not know the interest rate implicit in the lease payments is 11%. The present value of an annuity due of 1 for 6 years at 10% is 4.7908. The present value of an annuity due of 1 for 6 years at 11% is 4.6959. The present value of 1 for 6 years at 10% is 0.56447. The present value of 1 for 6 years at 11% is 0.53464. In its December 31, 2019 balance sheet, Barton should report a lease liability of

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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