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bachelor in business administration
Polytechnic State University Sanluis
Jan-2006 - Nov-2010
CPA
Polytechnic State University
Jan-2012 - Nov-2016
Professor
Harvard Square Academy (HS2)
Mar-2012 - Present
M21-9 On August 1, 2007 Kern Company leased a machine to Day Company for a six-year period requiring payments of $10,000 at the beginning of each year. The machine cost $48,000, which is the fair value at the lease date, and has a useful life of eight years with no residual value. Kern’s implicit interest rate is 10% and present value factors are as follows:
Present value for an annuity due of $1
at 10% for six periods 4.791
Present value for an annuity due of $1
at 10% for eight periods 5.868
Kern appropriately recorded the lease as a direct financing lease. At the inception of the lease, the gross lease receivables account balance should be
a. $60,000 c. $48,000
b. $58,680 d. $47,910
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