Answer:
Explanation:
A capital lease is a lease arrangement in which the lessor agrees to transfer the ownership of an asset to the lessee at the completion of the lease period. During the leasing contract , the lease is treated like an asset in the company's balance sheet
Lease liability at inception =                             676,000
Annual payment  made on December 2017 =(100,000)
Balance lease liability on 2017                        = 576,000
Lease liability on December 2018
Balance on 2017                                                =576,000
Factor in 10% discount on lease payment
100,000 - (576,000*10%)= 100,000-57,600 =   (42,400)
Balance on lease liability =                                  533,600
The current liability portion =
Factoring in the 10% discount =
100,000 - (533,600*10%) = 100,000 - 53,360 =  46,640