On January 1 2020, Zincorne Corp. entered into an agreement to lease a specialized machine from Lessor Inc. The machinery has a current fair market value of $150,000. Details of the lease contract follow:the lease term is 5 years the economic life of the equipmement is 6 years zincorne has the option to purchase the equipment for $10,000 at the end of the lease term. The estimated value of the equipment at this time is $27,000the implied interest rate in the lease is 8% but is not known to zincorne nor is it readily determinablezincorne's current IBR is 9%annual payments of $33,200 commence on Jnauary 1 2020zincorne follows IFRS and has a December 31 year end What is the balance of the lease liability at the end of december 31?

Given data, FV=$10,000 Lease term (N) =5 years IBR(I)=9% Annual payments (PMT)=$33,200 Therefore,…

Answered: On January 1 2020, Zincorne Corp.…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Problem 1Q

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On January 1 2020, Zincorne Corp. entered into an agreement to lease a specialized machine from Lessor Inc. The machinery has a current fair market value of $150,000. Details of the lease contract follow:

the lease term is 5 years
the economic life of the equipmement is 6 years
zincorne has the option to purchase the equipment for $10,000 at the end of the lease term. The estimated value of the equipment at this time is $27,000
the implied interest rate in the lease is 8% but is not known to zincorne nor is it readily determinable
zincorne's current IBR is 9%
annual payments of $33,200 commence on Jnauary 1 2020
zincorne follows IFRS and has a December 31 year end

What is the balance of the lease liability at the end of december 31?

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