Calculate the impact that the lease will have in first month

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On January 1, 2020, Bountee Ltd. leased a machine from Vector Equipment Ltd. The machine had cost Vector $416,500 to manufacture, and would normally have sold for about $595,000. The lease was for 10 years and requires equal monthly payments of $6,490 which reflects an annual interest rate of 8%. While the machine is expected to have a total useful life of 12 years, Bountee's management plans to return it to Vector at the end of the 10-year lease. Bountee's management has also determined that the present value of the minimum lease payments was $534,915 at the time the lease was entered into.

Problem 1: Calculate the impact that the lease will have in the first month on Bountee's statement of financial position.

Problem 2: Calculate the impact that the lease will have in the first month on Bountee's statement of income.

Reference no: EM132915081

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