On December 30, year 1, Rafferty Corp. leased equipment
under a capital lease. Annual lease payments of $20,000 are due
December 31 for ten years. The equipment’s useful life is ten
years, and the interest rate implicit in the lease is 10%. The capital
lease obligation was recorded on December 30, year 1, at
$135,000, and the first lease payment was made on that date.
What amount should Rafferty include in current liabilities for this
capital lease in its December 31, year 1 balance sheet?