On December 31,2014,Behring Enterprises Leased Equipment from R & R

On December 31,2014,Behring Enterprises leased equipment from R & R Equipment Rental.Pertinent lease transaction data are as follows:
•The estimated seven-year useful equipment life coincides with the lease term.
•The first of the seven equal annual $300,000 lease payments was paid on December 31,2014.
•R & R's implicit interest rate of 12 percent is known to Behring.
•Behring's incremental borrowing rate is 14 percent.
•Present values of an annuity of 1 in advance for seven periods are 5.11 at 12 percent and 4.89 at 14 percent.
Behring should record the equipment on the books at

A) $2,100,000.
B) $1,533,000.
C) $1,467,000.
D) $0.

Correct Answer:

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