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23 On January 1, 20X1, Miriam Company entered into a 10-year noncancelable lease for milling equipment. The lease called for payments of $30,000 starting at the end of the first year. Title will pass to Miriam Company at the expiration of the lease. Miriam accounted for this transaction properly as a finance lease. The equipment has an estimated useful life of 15 years, with no salvage value. The lease payments were determined to have a present value of $180,000, based on an incremental borrowing rate of 10%. In the 20X1 income statement of Miriam Company, what amount of interest expense and amortization expense should Miriam report from this lease transaction? A $12,000 interest and $18,000 amortization B $15,000 interest and $12,000 amortization C C $15,000 interest and $18,000 amortization $18.000 interest and $12.000 amortization

23 On January 1, 20X1, Miriam Company entered into a 10-year noncancelable lease for milling equipment. The lease called for payments of $30,000 starting at the end of the first year. Title will pass to Miriam Company at the expiration of the lease. Miriam accounted for this transaction properly as a finance lease. The equipment has an estimated useful life of 15 years, with no salvage value. The lease payments were determined to have a present value of $180,000, based on an incremental borrowing rate of 10%. In the 20X1 income statement of Miriam Company, what amount of interest expense and amortization expense should Miriam report from this lease transaction? A $12,000 interest and $18,000 amortization B $15,000 interest and $12,000 amortization C C $15,000 interest and $18,000 amortization $18.000 interest and $12.000 amortization

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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23 On January 1, 20X1, Miriam Company entered into a 10-year noncancelable lease for milling equipment. The lease called for payments of $30,000 starting at the end of the first year. Title will pass to Miriam Company at the expiration of the lease. Miriam accounted for this transaction properly as a finance lease. The equipment has an estimated useful life of 15 years, with no salvage value. The lease payments were determined to have a present value of $180,000, based on an incremental borrowing rate of 10%. In the 20X1 income statement of Miriam Company, what amount of interest expense and amortization expense should Miriam report from this lease transaction? A B C D the $12,000 interest and $18,000 amortization $15,000 interest and $12,000 amortization $15,000 interest and $18,000 amortization $18,000 interest and $12,000 amortization
Transcribed Image Text:23 On January 1, 20X1, Miriam Company entered into a 10-year noncancelable lease for milling equipment. The lease called for payments of $30,000 starting at the end of the first year. Title will pass to Miriam Company at the expiration of the lease. Miriam accounted for this transaction properly as a finance lease. The equipment has an estimated useful life of 15 years, with no salvage value. The lease payments were determined to have a present value of $180,000, based on an incremental borrowing rate of 10%. In the 20X1 income statement of Miriam Company, what amount of interest expense and amortization expense should Miriam report from this lease transaction? A B C D the $12,000 interest and $18,000 amortization $15,000 interest and $12,000 amortization $15,000 interest and $18,000 amortization $18,000 interest and $12,000 amortization
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