The following information relates to Wilson, Inc.'s equipment lease with an inception date of January 1 Fair value of equipment at lease inception, $91,200 • Lease term, 4 years - Economic life of property, 5 years •Implicit interest rate, 6% • Annual lease payment due on December 31, $25,600 • Present value of the lease payments, $88,707 The equipment reverts back to the lessor at the end of the lease term. How much is interest expense on the lease for the first year? Select one: a. $2,736 O b. $1,331 c. $5,322 O d. $5,472

The following information relates to Wilson, Inc.'s equipment lease with an inception date of January 1 Fair value of equipment at lease inception, $91,200 • Lease term, 4 years - Economic life of property, 5 years •Implicit interest rate, 6% • Annual lease payment due on December 31, $25,600 • Present value of the lease payments, $88,707 The equipment reverts back to the lessor at the end of the lease term. How much is interest expense on the lease for the first year? Select one: a. $2,736 O b. $1,331 c. $5,322 O d. $5,472

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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