Elton Electronics leases testing equipment to Startup Corporation. The equipment is not specialized and is delivered on January 1, 2023. The fair value of the equipment is $103,000. The cost of the equipment to Elton is $98,000 and the expected life of the testing equipment is 8 years. Elton incurs initial direct costs of $10,000, which they elect to expense. The lease term for the equipment is 8 years, with the first payment due upon delivery, and seven subsequent annual payments beginning on December 31, 2023 and ending on December 31, 2029. Elton's implicit rate is 8% and they expect that collection of the $13,000 lease payments is probable.What is the principal balance in the Net Investment in Lease — Sale Type account at the commencement of the lease? Group of answer choices $67,683 $60,098 $98,000 $80,683
Elton Electronics leases testing equipment to Startup Corporation. The equipment is not specialized and is delivered on January 1, 2023. The fair value of the equipment is $103,000. The cost of the equipment to Elton is $98,000 and the expected life of the testing equipment is 8 years. Elton incurs initial direct costs of $10,000, which they elect to expense. The lease term for the equipment is 8 years, with the first payment due upon delivery, and seven subsequent annual payments beginning on December 31, 2023 and ending on December 31, 2029. Elton's implicit rate is 8% and they expect that collection of the $13,000 lease payments is probable.What is the principal balance in the Net Investment in Lease — Sale Type account at the commencement of the lease? Group of answer choices $67,683 $60,098 $98,000 $80,683
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter20: Accounting For Leases
Section: Chapter Questions
Problem 10MC: On August 1, 2019, Kern Company leased a machine to Day Company for a 6-year period requiring...
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Question
Elton Electronics leases testing equipment to Startup Corporation. The equipment is not specialized and is delivered on January 1, 2023. The fair value of the equipment is $103,000. The cost of the equipment to Elton is $98,000 and the expected life of the testing equipment is 8 years. Elton incurs initial direct costs of $10,000, which they elect to expense. The lease term for the equipment is 8 years, with the first payment due upon delivery, and seven subsequent annual payments beginning on December 31, 2023 and ending on December 31, 2029. Elton's implicit rate is 8% and they expect that collection of the $13,000 lease payments is probable.
What is the principal balance in the Net Investment in Lease — Sale Type account at the commencement of the lease?
What is the principal balance in the Net Investment in Lease — Sale Type account at the commencement of the lease?
Group of answer choices
$67,683
$60,098
$98,000
$80,683
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