CAPBS Inc. enters into a lease agreement to acquire the use of a piece of machinery for four years beginning on 1 January 20X0. The lease requires four annual payments of €28,679 starting on 1 January 20X0. The useful life of the machine is four years, and its salvage value is zero. CAPBS follows US GAAP and accounts for the lease as a finance lease. The fair value of the machine is €100,000. The present value of the lease payments using the company's discount rate of 10 percent is €100,000. The company uses straight-line depreciation. 2. What is the amount of the lease liability reported on the balance sheet on 1 January 20X0? What interest expense is reported in fiscal year 20X0?
CAPBS Inc. enters into a lease agreement to acquire the use of a piece of machinery for four years beginning on 1 January 20X0. The lease requires four annual payments of €28,679 starting on 1 January 20X0. The useful life of the machine is four years, and its salvage value is zero. CAPBS follows US GAAP and accounts for the lease as a finance lease. The fair value of the machine is €100,000. The present value of the lease payments using the company's discount rate of 10 percent is €100,000. The company uses straight-line depreciation. 2. What is the amount of the lease liability reported on the balance sheet on 1 January 20X0? What interest expense is reported in fiscal year 20X0?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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CAPBS Inc. enters into a lease agreement to acquire the use of a piece of machinery for four years beginning on 1 January 20X0. The lease requires four annual payments of €28,679 starting on 1 January 20X0. The useful life of the machine is four years, and its salvage value is zero. CAPBS follows US GAAP and accounts for the lease as a finance lease. The fair value of the machine is €100,000. The present value of the lease payments using the company's discount rate of 10 percent is €100,000. The company uses straight-line
2. What is the amount of the lease liability reported on the balance sheet on 1 January 20X0? What interest expense is reported in fiscal year 20X0?
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