Incremental borrowing rate of the company

Reference no: EM13767191

Pursuit Company leased a machine on July 1, 2014, under a 10-year lease. The economic life of the machine is estimated to be 15 years. Title to the machine passes to Pursuit at the expiration of the lease, and thus, the lease is a capital lease. The lease payments at $97,000 per year, including executory costs of $3,000 per year, all payable in advance annually. The incremental borrowing rate of the company is 9%, and the lessor's implicit interest rate is unknown. Pursuit Company uses the straight-line method of amortization and the calendar year for reporting purposes.

Reference no: EM13767191

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