Multiple Choice
Exhibit 20-1
On January 1, 2016, Pearson Company signed a lease agreement requiring six annual payments of $60,000,
beginning December 31, 2016. Pearson's incremental borrowing rate was 9% and the lessor's implicit rate, known by
Pearson, was 10%. The present value factors of an ordinary annuity of $1 for six periods for interest rates of 9%
and 10% are 4.48592 and 4.35526, respectively.
-Refer to Exhibit 20-1. What would be the balance of the lease obligation on January 1, 2017, for financial reporting purposes after the lease payment? Round answers to the nearest dollar)
A) $0
B) $166,779
C) $227,447
D) $233,379
Correct Answer:
Verified
Correct Answer:
Verified
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