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On January 2017, John took out an operating lease for a tractor for a period of...

On January 2017, John took out an operating lease for a tractor for a period of 3 years. The annual lease payments of $50000 are paid in advance. The market interest rate is 8% and the interest rate implicit is in the lease is 9%. What is the value if the lease asset that will be recognised in the accounting record?

A. $0

b. $12885

C.$137955

D. $139165

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Answer #1

Answer: The tractor will be recorded at  C.$137955

Explanation

Since the ownership is transferred to the lessee this lease is finance lease and the asset will be recoleded in the books at

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