Refer to the following lease amortization schedule. The 10 payments are made annually starting with the beginning of the lease. Title does not transfer to the lessee and there is no purchase option or guaranteed residual value. The asset has an expected economic life of 12 years. The lease is noncancelable. Payment Cash Payment Effective Interest Decrease in balance Outstanding Balance 108,703 1 15,000 15,000 93,703 2 15,000 7,496 7,504 86,200 3 15,000 6,896 8,104 78,096 4 15,000 6,248 8,752 69,343 5 15,000 5,547 9,453 59,891 6 15,000 4,791 10,209 49,682 7 15,000 3,975 11,025 38,656 8 15,000 3,093 11,907 26,749 9 15,000 ? ? ? 10 15,000 ? ? ? What amount would the lessee record as annual amortization on the right-of-use asset using the straight-line method? (Round your answer to the nearest dollar.) Multiple Choice $9,370. $15,000. $10,870. $10,934.
Refer to the following lease amortization schedule. The 10 payments are made annually starting with the beginning of the lease. Title does not transfer to the lessee and there is no purchase option or guaranteed residual value. The asset has an expected economic life of 12 years. The lease is noncancelable. Payment Cash Payment Effective Interest Decrease in balance Outstanding Balance 108,703 1 15,000 15,000 93,703 2 15,000 7,496 7,504 86,200 3 15,000 6,896 8,104 78,096 4 15,000 6,248 8,752 69,343 5 15,000 5,547 9,453 59,891 6 15,000 4,791 10,209 49,682 7 15,000 3,975 11,025 38,656 8 15,000 3,093 11,907 26,749 9 15,000 ? ? ? 10 15,000 ? ? ? What amount would the lessee record as annual amortization on the right-of-use asset using the straight-line method? (Round your answer to the nearest dollar.) Multiple Choice $9,370. $15,000. $10,870. $10,934.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Refer to the following lease amortization schedule. The 10 payments are made annually starting with the beginning of the lease. Title does not transfer to the lessee and there is no purchase option or guaranteed residual value. The asset has an expected economic life of 12 years. The lease is noncancelable.
| Payment | Cash Payment |
Effective Interest |
Decrease in balance |
Outstanding Balance | |||||
| 108,703 | |||||||||
| 1 | 15,000 | 15,000 | 93,703 | ||||||
| 2 | 15,000 | 7,496 | 7,504 | 86,200 | |||||
| 3 | 15,000 | 6,896 | 8,104 | 78,096 | |||||
| 4 | 15,000 | 6,248 | 8,752 | 69,343 | |||||
| 5 | 15,000 | 5,547 | 9,453 | 59,891 | |||||
| 6 | 15,000 | 4,791 | 10,209 | 49,682 | |||||
| 7 | 15,000 | 3,975 | 11,025 | 38,656 | |||||
| 8 | 15,000 | 3,093 | 11,907 | 26,749 | |||||
| 9 | 15,000 | ? | ? | ? | |||||
| 10 | 15,000 | ? | ? | ? | |||||
What amount would the lessee record as annual amortization on the right-of-use asset using the straight-line method? (Round your answer to the nearest dollar.)
Multiple Choice
-
$9,370.
-
$15,000.
-
$10,870.
-
$10,934.
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