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:
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter20: Accounting For Leases
Section: Chapter Questions
Problem 5RE: Use the information in RE20-3. Prepare the journal entries that Garvey Company would make in the...
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![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:](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7ddb9429-8c81-4c29-b421-0f36420399d5%2F98e7b903-e7b9-45a0-896e-ee11d0abe7a7%2Fjr8de3n_processed.jpeg&w=3840&q=75)
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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