On January 1, 2021, Company C leases space for a shop. The lease is for four years with payments to be made at the beginning of each year. The lease calls for Company C to pay $70,000 on January 1, 2021, $75,000 on January 1, 2022, $80,000 on January 1, 2023 and $85,000 on January 1, 2024. Company C has classified the lease as an operating lease with the leave value to be the present value of cash payments. Company C has a calendar reporting year and an incremental borrowing rate of 12%. It uses straight- line depreciation for its long-lived assets. Required: Calculate the value of lease and interest expense and prepare the amortization table

On January 1, 2021, Company C leases space for a shop. The lease is for four years with payments to be made at the beginning of each year. The lease calls for Company C to pay $70,000 on January 1, 2021, $75,000 on January 1, 2022, $80,000 on January 1, 2023 and $85,000 on January 1, 2024. Company C has classified the lease as an operating lease with the leave value to be the present value of cash payments. Company C has a calendar reporting year and an incremental borrowing rate of 12%. It uses straight- line depreciation for its long-lived assets. Required: Calculate the value of lease and interest expense and prepare the amortization table

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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