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Long-Term Asset

JK company has the following balances on the 2008 B/S: current assets = 70,000, long-term assets = 250,000, current liability = 40,000, long-term debt = 130,000, and stockholders equity = 150,000. The company has an operating lease contract. It promises to pay a lessor $10,000 annually for the next three years. The company's average borrowing rate (discount rate) is 10%. If the lease is recorded as a capital lease, what will be the long-term asset total?

A) about 285,131
B) about 274,868
C) about 250,000
D) about 296,321

Solution Preview

C) about 250,000

This is a trick question. The question wants the total of long term assets, ...

Solution Summary

This solution calculates the exact long-term asset total for JK Company.