Multiple Choice
Barnum, Inc., leased equipment from Baily Supply on December 31, 2011. The lease term is for the 10-year period expiring December 30, 2021. The useful life of the leased asset is 10 years. Equal annual payments under the lease are $100,000 due on December 31 of each year. The first payment was made on December 31, 2011. Barnum's incremental borrowing rate was 12% at December 31, 2011. Baily's implicit rate for the lease is 10% and is known by Barnum. Barnum appropriately accounts for the lease as a capital lease.
What is the balance in Barnum's "Liability Under Lease Agreements" account at December 31, 2012?
A) $533,492
B) $545,010
C) $643,492
D) $800,000
Correct Answer:
Verified
Correct Answer:
Verified
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