What is the lease liability that stockton should report


Stockton, Inc. leased machinery with a fair value of $250,000 from Layton Machine Co. on December 31, 2001. The contract is a six-year noncancellable lease with an implicit interest rate of 10 percent. The lease requires annual payments of $50,000 beginning December 31, 2001. Stockton appropriately accounted for the lease as a capital lease. Stockton's incremental borrowing rate is 12 percent. Assuming the present value of an annuity due of 1 for 6 years at 10 percent is 4.7908 and the present value of an annuity due of 1 for 6 years at 12 percent is 4.6048, what is the lease liability that Stockton should report on the balance sheet at December 31, 2001?

A. $189,540

B. $200,000

C. $230,240

D. $239,540

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Accounting Basics: What is the lease liability that stockton should report
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