Refer to the following lease amortization schedule. The five payments are made annually starting with the beginning of the lease. A $2,300 purchase option is reasonably certain to be exercised at the end of the five-year lease. The asset has an expected economic life of eight years. Lease Cash Effective Decrease in Outstanding Payment Payment Interest Balance Balance 1 2 3 4 5 6 8,900 8,900 8,900 8,900 8,900 2,300 ?? 2,964 2,370 1,717 ?? 209 ?? 5,936 6,530 7,183 ?? 2,091 38,540 29,640 23,704 17,174 9,992 ?? 0 What amount would the lessee record as annual amortization on the asset using the straight-line method, assuming no residual value? (Round your answer to the nearest whole dollar.)
Refer to the following lease amortization schedule. The five payments are made annually starting with the beginning of the lease. A $2,300 purchase option is reasonably certain to be exercised at the end of the five-year lease. The asset has an expected economic life of eight years. Lease Cash Effective Decrease in Outstanding Payment Payment Interest Balance Balance 1 2 3 4 5 6 8,900 8,900 8,900 8,900 8,900 2,300 ?? 2,964 2,370 1,717 ?? 209 ?? 5,936 6,530 7,183 ?? 2,091 38,540 29,640 23,704 17,174 9,992 ?? 0 What amount would the lessee record as annual amortization on the asset using the straight-line method, assuming no residual value? (Round your answer to the nearest whole dollar.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Refer to the following lease amortization schedule. The five payments are made annually starting with the beginning of the lease. A $2,300 purchase
option is reasonably certain to be exercised at the end of the five-year lease. The asset has an expected economic life of eight years.
Lease Cash Effective Decrease in Outstanding
Payment Payment
Interest
Balance
Balance
1
2
3
4
5
6
8,900
8,900
8,900
8,900
8,900
2,300
Multiple Choice
$3,705
??
2,964
2,370
1,717
$5,850
??
209
What amount would the lessee record as annual amortization on the asset using the straight-line method, assuming no residual value? (Round your
answer to the nearest whole dollar)
??
5,936
6,530
7,183
??
2,091
38,540
29,640
23,704
17,174
9,992
??
0
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