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

---

Definitions:

Learning Curve

The graphical representation of the rate at which someone learns a new skill, indicating improvements in efficiency and performance over time.

Improvement Rate

The pace or degree of enhancement in processes, performance, or productivity over a given period.

Indirect Labour

Workers who support the manufacturing process or service delivery but do not directly contribute to the production of goods or execution of services.

Learning Curves

A graphical representation of how an increase in learning comes from greater experience, leading to reduced costs and increased productivity over time.