Asked by Kitty Dollas on May 12, 2024
Verified
Ginnie, Inc.entered into a five-year capital lease on December 31, 2010.This lease requires five minimum annual lease payments due on December 31 of each year.The first minimum payment was paid on December 31, 2010.This payment included which of the following? Interest Expense Lease LiabilityI. No Yes II. Yes No III. Yes Yes IV. No No \begin{array}{ll}&\text { Interest Expense}&\text { Lease Liability}\\\text {I.}&\text { No } & \text { Yes } \\\text {II.}&\text { Yes } & \text { No } \\\text {III.}&\text { Yes } & \text { Yes } \\\text {IV.}&\text { No } & \text { No }\end{array}I.II.III.IV. Interest Expense No Yes Yes No Lease Liability Yes No Yes No
A) I
B) II
C) III
D) IV
Lease Liability
A financial obligation recorded on the lessee's balance sheet, representing the present value of remaining lease payments.
Interest Expense
The charges an organization incurs from borrowing funds for a certain time frame.
Capital Lease
A lease agreement in which the lessee essentially buys an asset and borrows the funds through the lease, recording the asset and the liability on their balance sheet.
- Determine the interest charges linked to obligations from leases.
Verified Answer
SG
Samantha Giordano
May 13, 2024
Final Answer :
A
Explanation :
The question does not provide information on the specifics of the lease agreement or the minimum lease payments, so it is difficult to accurately determine which of the options are included in the first payment. However, as the first payment was made on December 31, 2010, it is likely that it included at least the first minimum annual lease payment due on that date, which would be Option I. Options II, III, and IV are not necessarily included in the first payment and may be spread out over the remaining four years of the lease.
Learning Objectives
- Determine the interest charges linked to obligations from leases.