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Sunland Corporation entered into an operating lease agreement to lease equipment from Carla Vista, Inc....

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Accounting

Sunland Corporation entered into an operating lease agreement to lease equipment from Carla Vista, Inc. on January 1, 2025. The lease calls for annual lease payments of $40,000, beginning on January 1, for each of the 3 years of the lease. In addition, Carla Vista will pay Sunland $7,000 as a cash incentive for entering the lease by January 1, 2025. In relation to the lease agreement, Sunland incurred the following costs.

Salaries of employees involved in the investigation of the lease $2,500

Lease document preparation costs incurred after execution of the lease 500

Sunlands incremental borrowing rate is 6%. If the value of the lease liability is $113,336, what amount will Sunland record as the value of the right-of-use asset on January 1, 2025, at commencement of the operating lease?

Value of the right-of-use asset $______________

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