For the Following Lease, Determine the Amount the ROU Asset

question 40

Multiple Choice

For the following lease, determine the amount the ROU asset will be initially measured at assuming that the company does not elect to use the practical expedient available to it.
$\begin{array}{|l|l|}\hline \begin{array}{l}\text { Annual payment (due at end of } \\\text { year) }\end{array} & \$ 22,000 \\\hline \text { Lease term } & 5 \\\hline \text { Incremental borrowing rate } & 10 \% \\\hline \begin{array}{l}\text { Implicit rate (not readily } \\\text { determinable by lessee) }\end{array} & 8 \% \\\hline \begin{array}{l}\text { Non-lease costs included in } \\\text { annual payment }\end{array} & 5,000 \\\hline\end{array}$

• A)64,443
• B)67,876
• C)83,397
• D)87,840

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Definitions:

Aggregate Demand

The total demand for all goods and services in an economy at a given overall price level and in a given time period.

Lag

A delay between an action and its effect or between two related events.

Federal Open Market Committee

The branch of the Federal Reserve Board that determines the direction of monetary policy in the United States.

Federal Reserve

The Federal Reserve is the central banking system of the United States, responsible for monetary policy, regulation of financial institutions, and ensuring stability of the financial system.