On January 2, 2021, Sandhill, Inc. signed a 10-year noncancelable lease for a heavy duty drill press. The lease stipulated annual payments of $260000 starting at the beginning of the first year, with title passing to Sandhill at the expiration of the lease. Sandhill treated this transaction as a finance lease. The drill press has an estimated useful life of 15 years, with no salvage value. Sandhill uses straight-line amortization for all of its plant assets. Aggregate lease payments were determined to have a present value of $1668591, based on implicit interest of 9%. In its 2021 income statement, what amount of amortization expense should Sandhill report from this lease transaction? ANSWER CHOICES: $166859 $111239 $137239 $260000
On January 2, 2021, Sandhill, Inc. signed a 10-year noncancelable lease for a heavy duty drill press. The lease stipulated annual payments of $260000 starting at the beginning of the first year, with title passing to Sandhill at the expiration of the lease. Sandhill treated this transaction as a finance lease. The drill press has an estimated useful life of 15 years, with no salvage value. Sandhill uses straight-line amortization for all of its plant assets. Aggregate lease payments were determined to have a present value of $1668591, based on implicit interest of 9%.
In its 2021 income statement, what amount of amortization expense should Sandhill report from this lease transaction?
ANSWER CHOICES:
| $166859 |
|
|
$111239 |
|
|
$137239 |
|
|
$260000 |
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