On January 1, 2014, KAR Co. . a lessee, signed a 10-year non cancelable lease for a machine stipulating annual payments of P 200,000. The first payment was made on January 1, 2014. KAR approximately treated this transaction as a finance lease. The ten lease payments have a present value of P 1,350,000 at January 1, 2014, based on implicit interest of 10%. For the year ended Dec. 31, 2014, how much should KAR record as interest expense?
On January 1, 2014, KAR Co. . a lessee, signed a 10-year non cancelable lease for a machine stipulating annual payments of P 200,000. The first payment was made on January 1, 2014. KAR approximately treated this transaction as a finance lease. The ten lease payments have a present value of P 1,350,000 at January 1, 2014, based on implicit interest of 10%. For the year ended Dec. 31, 2014, how much should KAR record as interest expense?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 2014, KAR Co. . a lessee, signed a 10-year non cancelable lease for a machine stipulating annual payments of P 200,000. The first payment was made on January 1, 2014. KAR approximately treated this transaction as a finance lease. The ten lease payments have a present value of P 1,350,000 at January 1, 2014, based on implicit interest of 10%. For the year ended Dec. 31, 2014, how much should KAR record as interest expense?
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