On january 1, 2017, Nolte Company leased a machine from Durdil, Inc. for a five- year period. Equal annual payments under the lease are $290,000 and are paid on the end of each year. The first payment was made on December 31, 2017. The five lease payments are discounted at 11% over the lease term. The present value of minimum lease payments at the inception of the lease was $1,251,000. The lease is appropriately accounted for as a finance lease by Nolte. In its December 31, 2017 statement the balance of lease liability would be:
On january 1, 2017, Nolte Company leased a machine from Durdil, Inc. for a five- year period. Equal annual payments under the lease are $290,000 and are paid on the end of each year. The first payment was made on December 31, 2017. The five lease payments are discounted at 11% over the lease term. The present value of minimum lease payments at the inception of the lease was $1,251,000. The lease is appropriately accounted for as a finance lease by Nolte. In its December 31, 2017 statement the balance of lease liability would be:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:On january 1, 2017, Nolte Company leased a
machine from Durdil, Inc. for a five-
year period. Equal annual payments
under the lease are $290,000 and are
paid on the end of each year. The first
payment was made on December 31,
2017. The five lease payments are
discounted at 11% over the lease term.
The present value of minimum lease
payments at the inception of the lease
was $1,251,000. The lease is
appropriately accounted for as a
finance lease by Nolte.
In its December 31, 2017 statement the
balance of lease liability would be:
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