On December 31, Year One, a company leases equipment for 8years, its entire life. Payments are $10,000 per year on December31 with the first one made immediately. The present value of thesepayments at the lessee's incremental borrowing rate of 10 percentper year is assumed to be $58,000. On the December 31, Year Onebalance sheet, what should this lessee report as its currentliability for this lease?
a.$0
b.$5,200
c.$6,000
d.$10,000
On January 1, Year One, a company leases equipment for 8 yearsalthough the equipment has a life of 10 years. At the end of thattime, title to this property will be conveyed to the lessee.Payments are $10,000 per year on January 1 with the first one madeimmediately. The present value of these payments at the lessee'sincremental borrowing rate of 10 percent per year is assumed to be$58,000. What amount of depreciation expense should the lesseerecognize for Year One?
a.$0
b.$5,800
c.$6,000
d.$7,250
On December 31, Year One, a company leases equipment for 8years, its entire life. Payments are $10,000 per year on December31 with the first one made immediately. The present value of thesepayments at the lessee's incremental borrowing rate of 10 percentper year is assumed to be $58,000. On the December 31, Year Onebalance sheet, what should this lessee report as its currentliability for this lease?
a.$0
b.$5,200
c.$6,000
d.$10,000
On January 1, Year One, a company leases equipment for 8 yearsalthough the equipment has a life of 10 years. At the end of thattime, title to this property will be conveyed to the lessee.Payments are $10,000 per year on January 1 with the first one madeimmediately. The present value of these payments at the lessee'sincremental borrowing rate of 10 percent per year is assumed to be$58,000. What amount of depreciation expense should the lesseerecognize for Year One?
a.$0
b.$5,800
c.$6,000
d.$7,250