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What the day should record a lease liability

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Q1. On December 31, 20X5, Day Co. leased a new machine from Parr with the following pertinent information:

Lease term 6 years

Annual rental payable at beginning of each year $50,000

Useful life of machine 8 years

Day's incremental borrowing rate 15%

Implicit interest rate in lease (known by Day) 12%

What the present value of an annuity of one in advance for six periods?

Q2. The lease is not renewable, and the machine reverts to Parr at the termination of the lease. The cost of the machine on Parr's accounting records is $375,500. At the beginning of the lease term, what the day should record a lease liability?

Reference no: EM132935977

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