[Anonymous]

NINJA Question –

I don’t understand why it’s wrong-PV of the lease liability-wouldn’t it be the PV of annual lease payments? The solution is taking first lease payment on its own and then PV of the remaining 3….(lease term is 4 years). Also, it says to create a journal entry for the first lease payment. It says in my Becker book that the first lease payment goes directly toward the principal, then why is it being treated as any other lease payment with a portion going to interest? It’s like I don’t know anything about leases…

[Anonymous]

I think i know my mistake in the first part-the PV factors were for ordinary annuity and this is annuity due, plus the total payment included executionary fees, which are excluded….and the first payment did all go to the liability, with 270 to executionary costs….Ok, it's all good.

[Author]

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