expected economic life of the asset is seven years. The lease term is five years. What would Small Corporation record a
1-
On January 1, year 8, Big Company leased equipment to Small Corporation under an operating lease. The present value of the end-of-year lease payments of $207,878 discounted at the implicit rate of 5% is $900,000. The expected economic life of the asset is seven years. The lease term is five years. What would Small Corporation record as amortization in year 8?
Multiple Choice
$135,000.
$162,878.
$180,000.
$0.
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2-
A Co. recorded a right-of-use asset of $400,000 in a 10-year operating lease. Payments of $65,100 are made annually at the end of each year. The interest rate charged by the lessor was 10%. The balance in the right-of-use asset after the first year will be:
Multiple Choice
$360,000.
$374,900.
$376,900.
$400,000.
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