Accounting-leases

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On January 1, 2013, Packard Corporation leased equipment to Hewlitt Company. The lease term is 9 years. The first payment of $452,000 was made on January 1, 2013. Remaining payments are made on December 31 each year, beginning with December 31, 2013. The equipment cost Packard Corporation $2,457,400. The present value of the minimum lease payments is $2,697,400. The lease is appropriately classified as a sales-type lease. Assuming the interest rate for this lease is 12%, what will be the balance reported as a liability by Hewlitt in the December 31, 2014, balance sheet?

All methods and formulas used must be in complience with GAAP standards, please no excel or calculator tricks and show how you got your numbers and the awnser, please.

Topic: accounting: Leases (GAAP)

Reference no: EM131258753

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