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25 March, 21:20

Suppose a company signs a three-year lease agreement. The lease payments have a present value of $40,000. Prior to signing the lease, the company had total assets of $600,000, total liabilities of $400,000, and total stockholders' equity of $200,000. Calculate the balance of total assets, total liabilities, and total stockholders' equity immediately after signing the lease.

Assets Liabilities

Stockholders' Equity

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  1. 25 March, 22:59
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    The balance of total assets, total liabilities, and total stockholders' equity is $640,000, $440,000 and $200,000 respectively.

    Explanation:

    The computation of the balance of total assets, total liabilities, and total stockholders' equity after considering the lease payment is shown below:

    For Total assets

    = Total assets balance + present value of lease payments

    = $600,000 + $40,000

    = $640,000

    For Total liabilities

    = Total liabilities balance + present value of lease payments

    = $400,000 + $40,000

    = $440,000

    And, the total stockholders' equity is $200,000

    While computing the stockholder equity, the lease payment does not have an impact on the stockholder equity so the balance would remain the same as before
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