Nace Manufacturing Company Nace Manufacturing Company Leased a Piece of Nonspecialized Equipment for Nonspecialized

question 78

Essay

Nace Manufacturing Company
Nace Manufacturing Company leased a piece of nonspecialized equipment for use in its operations from Righteous Leasing on January 1, 2019. The 10-year lease requires lease payments of $4,000, beginning on January 1, 2019, and at each December 31 thereafter through 2027. The equipment is estimated to have a 10-year life, is depreciated on the straight-line basis and will have no residual value at the end of the lease term. Nace's incremental borrowing rate is 11%. Initial direct costs of $1,000 are incurred on January 1, 2019. Righteous Leasing acquired the asset just prior to the lease term at a cost of $27,000. Collection of all lease payments is reasonably assured.
-What is the amount of the lease liability recorded by Nace at the lease's commencement?

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Definitions:

Epithelial Tissues

Layers of cells that line or cover the body surfaces, both internal and external, playing roles in protection, secretion, and absorption.

Bx

A shorthand notation for biopsy, a medical test involving the extraction of sample cells or tissues for examination.

Surgical Removal

The process of excising or taking out a body tissue, organ, or tumor through an operation, often to treat disease or injury.

Examination

A detailed inspection or analysis of an object or person, especially for medical purposes.