For the Following Lease, Determine the Amount the ROU Asset

question 20

Multiple Choice

For the following lease, determine the amount the ROU asset will be initially measured at.
$\begin{array}{|l|l|}\hline \text { Annual payment (due at end of year) } & \$ 22,000 \\\hline \text { Lease term } & 5 \\\hline \text { Incremental borrowing rate } & 10 \% \\\hline \text { Implicit rate (not readily determinable by lessee) } & 8 \% \\\hline \text { Unguaranteed residual value } & 15,000 \\\hline\end{array}$

• A)83,397
• B)92,711
• C)98,048
• D)102,304

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Definitions:

Paid-In Capital

Total amount of cash and other assets paid into the corporation by stockholders in exchange for capital stock.

Stock Dividend

A company rewards its shareholders with extra shares, foregoing the option to distribute cash.

Depreciation Expense

Allocating the price of a tangible asset consistently throughout its expected lifespan.

Prior Period Adjustment

An amendment to the financial statements, correcting errors from previously reported periods or adjustments due to changes in accounting policies.