Question

On January 1, 2018, Betty DeRose, Inc. leased office furniture and equipment
from Young Leasing Company. The terms of the lease require annual payments
of $50,000 for 10 years with the first payment being due on December 31, 2018.
Assume the interest rate on the lease is 10% and the lease qualifies as a
capital lease. Betty DeRose depreciates all assets using the double-declining
balance method.

Calculate the amount of the lease balance liability at December 31, 2019 that
would be classified as a long-term liability. 

Use the time value of money factors posted in canvas to answer this question.
To access these factors, click modules and then scroll to week 11. Click on
the link labeled present & future value table factors. No credit will be
awarded for this question using a means other than these table factors to
answer this question.

Answer 1

Year	Lease payment	Discount factor @10%	Present value
2018	50000	0.909091	45454.55
2019	50000	0.826446	41322.31
2020	50000	0.751315	37565.74
2021	50000	0.683013	34150.67
2022	50000	0.620921	31046.07
2023	50000	0.564474	28223.70
2024	50000	0.513158	25657.91
2025	50000	0.466507	23325.37
2026	50000	0.424098	21204.88
2027	50000	0.385543	19277.16
Lease balance at beginning			307228.36

Year	Beginning balance of lease liability	Lease payment	Interest expenses (beginning balance of lease liability*10%)	Reduction in lease liability (lease payment - interest expenses)	Ending balance of lease liability (beginning balance of lease liability - reduction in lease liability)
2018	307228.36	50000.00	30722.84	19277.16	287951.19
2019	287951.19	50000.00	28795.12	21204.88	266746.31
2020	266746.31	50000.00	26674.63	23325.37	243420.94
2021	243420.94	50000.00	24342.09	25657.91	217763.03
2022	217763.03	50000.00	21776.30	28223.70	189539.34
2023	189539.34	50000.00	18953.93	31046.07	158493.27
2024	158493.27	50000.00	15849.33	34150.67	124342.60
2025	124342.60	50000.00	12434.26	37565.74	86776.86
2026	86776.86	50000.00	8677.69	41322.31	45454.55
2027	45454.55	50000.00	4545.45	45454.55	0.00

Amount of lease liability at December 31, 2019 as per above table

266746.31