On January 1, 20x1, Row Co. leased a machine from Boat, Inc. Information on the lease is as follows Annual rent payable at the beginning of each year P200,000 Lease term 10 years 12 years Useful life of machine Implicit interest rate 10% The lease contract provides Row Co. an option to purchase the machine at the end of the lease term for P100,000. The option price approximates the machine's expected fair value at the end of the lease. Row Co. is reasonably certain to the exercise the option. What amount of interest expense should Row Co. recognize on the lease in 20x1? а. 139,036 b. 135,181 с. 119,036 d. 115,181

On January 1, 20x1, Row Co. leased a machine from Boat, Inc. Information on the lease is as follows Annual rent payable at the beginning of each year P200,000 Lease term 10 years 12 years Useful life of machine Implicit interest rate 10% The lease contract provides Row Co. an option to purchase the machine at the end of the lease term for P100,000. The option price approximates the machine's expected fair value at the end of the lease. Row Co. is reasonably certain to the exercise the option. What amount of interest expense should Row Co. recognize on the lease in 20x1? а. 139,036 b. 135,181 с. 119,036 d. 115,181

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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