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What is the lease payment amount larkspurshould use

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Question - LarkspurFashion Company enters into a lease arrangement with Highpoint Leasing for 5 years. Larkspuragrees to pay5% of its net sales as a variable lease payment. Larkspurdoes not pay any fixed payments.Larkspuris a highly successful company that has achieved over $1,750,000in net sales over the last 7 years. Both Larkspurand Highpoint forecast that net sales will be a much greater amount than $1,750,000in subsequent years. As a result, it is highly certain thatLarkspurwill make payments of at least $87,500($1,750,000×5%) each year. What is the lease payment amount Larkspurshould use to record its right-of-use asset?

Reference no: EM132976579

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