How do I get the Lease Liability for 1/1/17? Kleso, Intermedlate Accounting, 166

Question

How do I get the Lease Liability for 1/1/17?

Kleso, Intermedlate Accounting, 166 Help I System Announcements NEXT CALCULATOR PRINTER ERONBACK Exercise 21A-21 a-d Bridgeport Incorporated leases a piece of equipment to Metlock Corporation on January 1, 2017. The lease agreement called for annual rerital payments of $4,590 at the beginning of each year c a fair value of $24,000, a book value of $19,000, and both parties expect a residual value of $8,400 at the end of the lease the 4-year term, though this amount is not guaranteed. Bridgeport set the lease payments with the Intentof earning a 5% return, and M ownership of the lease does not transfer at the end of the lease term, and the asset is not of a specialized nature. lease. The equipment has an economic useful life of 6 years, etock s aware of this rate. There ls no bargain purchase option, (For calculation purposes, use 5 decimal places as displayed in the factor table provided.)

Explanation / Answer

Present value of annual payments 17090 =4590*3.72325 Present value residual value 6911 =8400*0.8227 Lease liability at 1/1/17 24000

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