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On December 31 2014 Roe Company leased a machine from Colt for a five year period Equal annual payments under the lease are $105000 including $5000 annual executory costs and are due

On December 31, 2014, Roe Company leased a machine from Colt for a five-year period. Equal annual payments under the lease are $105,000 (including $5,000 annual executory costs) and are due on December 31 of each year. The first payment was made on December 31, 2014, and the second payment was made on December 31, 2015. The five lease payments are discounted at 10% over the lease term. The present value of minimum lease payments at the inception of the lease and before the first annual payment was $417,000. Roe appropriately accounts for the lease as a capital lease. Required: What is the lease liability that Roe should report in its December 31, 2015, balance sheet?

Apr 24 2020 View more View Less

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