On December 31, 2025, Crane Co. leased a machine from Swifty, Inc. for a five-year period. Equal annual payments under the lease are $1500000 (including $88000 annual executory costs) and are due on December 31 of each year. The first payment was made on December 31, 2025, and the second payment was made on December 31, 2026. The five lease payments are discounted at 11% over the lease term. The present value of lease payments at the inception of the lease and before the first annual payment was $6153669. The lease is appropriately accounted for as a finance lease by Crane. In its December 31, 2026 balance sheet, Crane should report a lease liability of $4114248. $4525673. $4437673. $3665573.
On December 31, 2025, Crane Co. leased a machine from Swifty, Inc. for a five-year period. Equal annual payments under the lease are $1500000 (including $88000 annual executory costs) and are due on December 31 of each year. The first payment was made on December 31, 2025, and the second payment was made on December 31, 2026. The five lease payments are discounted at 11% over the lease term. The present value of lease payments at the inception of the lease and before the first annual payment was $6153669. The lease is appropriately accounted for as a finance lease by Crane. In its December 31, 2026 balance sheet, Crane should report a lease liability of $4114248. $4525673. $4437673. $3665573.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On December 31, 2025, Crane Co. leased a machine from Swifty, Inc. for a five-year period. Equal
annual payments under the lease are $1500000 (including $88000 annual executory costs) and are
due on December 31 of each year. The first payment was made on December 31, 2025, and the
second payment was made on December 31, 2026. The five lease payments are discounted at 11%
over the lease term. The present value of lease payments at the inception of the lease and before the
first annual payment was $6153669. The lease is appropriately accounted for as a finance lease by
Crane. In its December 31, 2026 balance sheet, Crane should report a lease liability of
$4114248.
$4525673.
$4437673.
$3665573.
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