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What is the value of the right-of-use asset

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Question - Leewin Brokerage enters into a lease agreement with Bumble Motors to lease an automobile with a fair value of ?$77, 000 under a 5 year lease on December? 20, 2018. The lease commences on January? 1, 2019, and Leewin will return the automobile to Bumble on December? 31, 2023. The automobile has an estimated useful life of 7 years. Leewin made a lease payment of $ 10, 000 on December? 20, 2018. In? addition, the lease agreement stipulates annual payments of $ 10, 000?, due on January 1 of? 2019, 2020,? 2021, 2022, and 2023. The implicit rate of the lease is 5?% and is known by Leewin. There is no purchase? option, no lease? incentives, no residual value? guarantees, and no transfer of ownership. Leewin incurs initial direct costs of $ 1, 100.

Compute the present value of the lease payments in order to determine if the lease meets the fourth Group I criterion. Calculate the present value of each payment individually. Assuming that this is classified as an operating? lease, what is the value of the right-of-use asset at the? lease's commencement?

Reference no: EM132867256

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