The lease qualifies as a capital lease

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Reference no: EM131294347

On January 1, Year1, Blaugh Co. signed a long-term lease for an office building. The terms of the lease required Blaugh to pay $10,000 annually, beginning December 31, Year1, and continuing each year for 30 years. The lease qualifies as a capital lease.

On January 1,Year1, the present value of the lease payments is $112,500 at the 8% interest rate implicit in the lease.

In Blaugh’s December 31, Year1, balance sheet, the capital lease liability should be :

Reference no: EM131294347

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