On January 1, 2010, Matilda Company Signed a Four-Year Lease

question 12

Multiple Choice

On January 1, 2010, Matilda Company signed a four-year lease requiring annual payments of $15, 000 with the first payment due on January 1, 2010.The fair value of the equipment leased was $50, 000.Matilda's incremental borrowing rate was 6%.Actuarial information for 6% follows: $\begin{array}{llr}&\text {3 Periods}&\text {4 Periods}&\text {5 Periods}\\ \text { Present value of an annuity due of \$ } &2.83339&3.67301&4.46511\\ \text { Present value of ordinary annuity of 1 \$} &2.67301&3.46511&4.21236\\\end{array}$
Assuming the lease qualifies as a capital lease, what amount should be recorded as leased equipment under capital leases on January 1, 2010 (rounded to the nearest dollar) ?

• A)$48, 185
• B)$50, 000
• C)$51, 977
• D)$55, 095

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