Capital lease; lessee; income statement effects
Response to the following :
In the situation described in problem 1, what would be the pretax amounts related to the lease that the lessee would report in its income statement for the year ended December 31?
Problem 1:
Capital lease; lessee; balance sheet effects
A lease agreement that qualifies as a capital lease calls for annual lease payments of $26,269 over a six-year lease term, with the first payment at January 1, the lease's inception. The interest rate is 5%. If lessee's fiscal year is the calendar year, what would be the amount of the lease liability that the lessee would report in its balance sheet at the end of the first year? What would be the interest payable?