On December 31 . 2014, Behring Enterprises leased equipment from R & R Equipment Rental. Pertinent lease transaction data are as follows: • The estimated seven-year useful equipment life coincides with the lease term. • The first of the seven equal annual $300,000 lease payments was paid on December 31 . 2014. • R & R's implicit interest rate of 1 . percent is known to Behring. •
Behring's incremental borrowing rate is 1 . percent. • Present values of an annuity of 1 in advance for seven periods are 5.11 at 1 . percent and 4.89 at 1 . percent. Behring should record the equipment on the books at
a. $2,100,000.
b. $1,533,000.
c. $1,467,000.
d. $0.
B
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