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What amount should ZGC record as a lease liability

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Question - Zoom Golfing Corporation (ZGC) (the lessee) entered into an agreement to lease equipment from the lessor for a five- year period. Payments on the lease are $22,000 per annum, first due on the commencement day of the lease. ZGC has the option to purchase the equipment for $6,000 the end of the lease agreement versus an estimated market value of $8,000. The useful life of the equipment is estimated to be nine years. The implicit rate in the lease is 5% per annum, however, this is not readily determinable by ZGC. ZCG's incremental borrowing costs for transactions of this are 6% per annum. What amount should ZGC record as a lease liability on inception of the lease?

Reference no: EM132604933

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