Lawson Leased Equipment from Tirado on January 1 of the Current

question 44

Multiple Choice

Lawson leased equipment from Tirado on January 1 of the current year. The lease is a 6-year lease with annual payments of $215,000 due on each January 1, beginning with the current year. Lawson's incremental borrowing rate is 8%; Lawson knows that Tirado's implicit interest rate is 6%. What is the balance of Lawson's lease liability at December 31 or the current year?

• A) $815,019
• B) $905,658
• C) $713,735
• D) $840,154

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