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What amount should Robbins record as lease liability

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Question - Robbins Inc. leased a machine from Ready Leasing Co. The lease qualifies as a finance lease and requires 10 annual payments of $20,000 beginning immediately. The lease specifies an interest rate of 10% and a purchase option of $20,000 at the end of the tenth year, even though the machine's estimated value on that date is $30,000. Robbins' incremental borrowing rate is 12%. The present value of an annuity due of 1 at: 10% for 10 years is 6.759 and 12% for 10 years is 6.328. The present value of 1 at: 10% for 10 years is 0.385 and 12% for 10 years is 0.322. What amount should Robbins record as lease liability at the beginning of the lease term?

Reference no: EM133070440

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