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N Corp. entered into a nine-year capital lease on a warehouse on December 31, 2011. Lease payments of $26,000, which includes real estate taxes of $1,000, are due annually, beginning on December 31, 2012, and every December 31 thereafter. Neal does not know the interest rate implicit in the lease; N's incremental borrowing rate is 9%. The rounded present value of an ordinary annuity for nine years at 9% is 6.0. What amount should N report as capitalized lease liability at December 31, 2011?

a. $150,000.

b. $156,000.

c. $225,000.

d. $234,000.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M971781

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