On 1 January 2012 Dobel Ltd Signed a 10-Year Non-Cancellable

On 1 January 2012 Dobel Ltd signed a 10-year non-cancellable lease that requires a payment of $100 000 at the end of each year.Ownership of the leased asset remains with the lessor at expiry of the lease.The incremental borrowing rate of Dobel Ltd is 12% while the implicit rate of the lessor known to Dobel Ltd is 10%. The following information is also available: $\begin{array}{|r|r|r|}\hline \text { Period } & \text { Present value of an annuity of } \$ 1 \\\hline & 10 \% & 12 \\\hline 10 & 6.1446 & 5.6502 \\\hline\end{array}$ At what amount should the leased property be recorded in the books of Dobel Ltd?

A) $0
B) $565 020
C) $614 460
D) $1 000 000

Correct Answer:

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