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1. What is the initial lease liability? 7,100,000 6,450,000 9,210,000 9,600,000 2. What is the cost of the right of use asset? 8,750,000 8,700,000 9,255,000

image text in transcribed 1. What is the initial lease liability?

7,100,000

6,450,000

9,210,000

9,600,000

2. What is the cost of the right of use asset?

8,750,000

8,700,000

9,255,000

7,755,000

3. What total amount of interest expense should be reported for the current year?

710,000

785,600

804,500

830,000

4. What is the lease liability at year-end?

6,310,000

5,694,000

9,060,000

5,600,000

5. What is the depreciation of the right of use asset for the current year?

1,450,000

1,550,000

870,000

875,000

At the beginning of the current year, an entity leased a building from a lessor with the following pertinent information: Annual rental payable at the end of the year. 1,500,000 Initial direct cost paid.......... 405,000 Lease bonus paid to lessor before commencement of the lease 300,000 Lease incentive received ........... 50,000 Cost of restoring building as required by contract...... 1,500,000 Present value of restoration cost discounted at 8% for six periods. 945,000 Leasehold improvement - useful life: 8 years........... 600,000 Purchase option that is reasonably certain to be exercised 1,000,000 Lease term......... .6 years Useful life ..... Implicit interest rate ... 10% PV of an ordinary annuity of 1 for periods at 10%. 4.36 PV of an ordinary annuity of 1 for 10 periods at 10%. 6.14 Present value of 1 for 6 periods at 10%....... 0.56 Present value of 1 for 10 periods at 10%. 0.39 Present value of 1 for 6 periods at 8%. 0.36 10 years

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