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On October 1, 2017, Vaughn, Inc., leased a machine from Fell Leasing Company for five years....

On October 1, 2017, Vaughn, Inc., leased a machine from Fell Leasing Company for five years. The lease requires five annual payments of $10,000 beginning September 30, 2018. Vaughn’s incremental borrowing rate is 11%, and it uses a calendar year for reporting purposes. The machine has a 12-year economic life with zero salvage value. Vaughn correctly classifies the lease as an operating lease under ASU 2016-02. Use the appropriate factors (PV of 1, PVAD of 1, and PVOA of 1).

3) How much of the lease liability should be classified as current on December 31, 2017, and December 31, 2018?

P.S. I already got the value of the leased equipment, which is $36,959. The rent expense for 2017 is $2,500 and for 2018 is $10,000

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ekkarill92 answered 2 years ago
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