MacKenzie Company is planning leasing a new asset. The lease would run for eight years and require eight beginning-of-year payments of $100,000 each. If MacKenzie capitalizes this lease for fi nancial reporting purposes at a 10 percent rate, what asset amount will be reported initially on its balance sheet? What liability amount will be reported on its balance sheet? (Remember, lease payments are made at the beginning of each year, making them an annuity due.)
Would this mean on the balance sheet $800,000 would be the liability amount on the balance sheet originally?