Answer is $34,600Please explain the reasoning and calculations Questions 7-9 are based on the following lease amortization schedule. The five payments aremade annually starting with the inception of the lease. A $2,000 bargain purchase option isexercisable at the end of the five-year lease. The asset has an expected economic life of eightyears.Effective Decrease inBalanceLeaseCashPayment PaymentInterestBalance34,6008,000????26,6008,0002.6605.34021,26015,3868,9252,1265,8748,0008,0001,5396.461??????8,0002,0001821.8181231t56 7. What is the amount of Right of Use recognized at the inception of the lease?a. $0 because it is an operating leaseb. $8,000c. $26,600d. $34,600e. $42,600

Lease means giving out the assets by lessor to lessee to use that assets in return of rent.…

Answered: 7. What is the amount of Right of Use…

7. What is the amount of Right of Use recognized at the inception of the lease? a. $0 because it is an operating lease b. $8,000 c. $26,600 d. $34,600 e. $42,600

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter20: Accounting For Leases

Section: Chapter Questions

Problem 5RE: Use the information in RE20-3. Prepare the journal entries that Garvey Company would make in the...

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Question

Answer is $34,600 Please explain the reasoning and calculations

7. What is the amount of Right of Use recognized at the inception of the lease?
a. $0 because it is an operating lease
b. $8,000
c. $26,600
d. $34,600
e. $42,600

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