Sanborn, Inc., leased equipment from Chase Supply on December 31, 2014. The lease term is for the 10-year period expiring December 30, 2021. The useful life of the leased asset is 10 years. Equal annual payments under the lease are $100,000 due on December 31 of each year. The first payment was made on December 31, 2014. Sanborn’s incremental borrowing rate was 12% at December 31, 2014. Chase’s implicit rate for the lease is 10% and is known by Sanborn. Sanborn appropriately accounts for the lease as a capital lease.
What is the balance in Sanborn’s “Liability Under Lease Agreements” account at December 31, 20 What is the balance in Sanborn’s “Liability Under Lease Agreements” account at December 31 15?
$533,492
$545,010
$643,492
$800,000