Neal Corp. entered into a nine-year capital lease on a warehouse on December 31, 2006. Lease payments of $52,000, which includes real estate taxes of $2,000, are due annually, beginning on December 31, 2007, and every December 31 thereafter. Neal does not know the interest rate implicit in the lease; Neal’s incremental borrowing rate is 9%. The rounded present value of an ordinary annuity for nine years at 9% is 5.6. What amount should Neal report as capitalized lease liability at December 31, 2006?
- $280,000
- $291,200
- $450,000
- $468,000