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What is the amount recorded for the leased asset

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Question - Blossom, Inc. leased equipment from Tower Company under a 4-year lease requiring equal annual payments of $444152, with the first payment due at lease inception. The lease does not transfer ownership, nor is there a bargain purchase option. The equipment has a 4-year useful life and no salvage value. If Blossom, Inc.'s incremental borrowing rate is 11% and the rate implicit in the lease (which is known by Blossom, Inc.) is 9%, what is the amount recorded for the leased asset at the lease inception?

 

PV Annuity Due

PV Ordinary Annuity

9%, 4 periods

3.53129

3.23972

11%, 4 periods

3.44371

3.10245

a. $1377959

b. $1529531

c. $1568430

d. $1438928

Reference no: EM133091170

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