Question
Wet Paint Company signed a ten-year lease agreement on January 1, 2015. The lease requires payments of $65,000 per year every December 31.
Wet Paint estimates that the leased property has a life of 11 years. The interest rate that applies to the lease is 12%.
If a balance sheet is presented on January 1, 2015, what amounts related to the lease will appear on the balance sheet?