t the beginning of current year, Panorama Company leased a building form a lessor with the following pertinent information Annual rental payable at the end of each year 1,000,000 Initial direct cost paid 400,000 Lease incentive received 100,000 Leasehold improvement 200,000 Purchase option that is reasonably certain to be exercised 500,000 Lease term 5 years Useful life of building 8 years Implicit interest rate 10% PV of an ordinary annuity of 1 for 5 periods at 10% 3.79 Present value of 1 for 5 periods at 10% 0.62
At the beginning of current year, Panorama Company leased a building form a lessor with the following pertinent information
|
Annual rental payable at the end of each year |
1,000,000 |
|
Initial direct cost paid |
400,000 |
|
Lease incentive received |
100,000 |
|
Leasehold improvement |
200,000 |
|
Purchase option that is reasonably certain to be exercised |
500,000 |
|
Lease term |
5 years |
|
Useful life of building |
8 years |
|
Implicit interest rate |
10% |
|
PV of an ordinary annuity of 1 for 5 periods at 10% |
3.79 |
|
Present value of 1 for 5 periods at 10% |
0.62 |
1. What is the cost of the right of use asset?
a. 4,500,000
b. 4,400,000
c. 4,700,000
d. 4,600,000
2. What is the
a. 880,000
b. 900,000
c. 550,000
d. 575,000
3. What is the interest expense for current year?
a. 410,000
b. 379,000
c. 450,000
d. 429,000
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