Question
Montana Corp. on Dec 31, 2018 signed a 4 year noncancelable lease for certain machinery. The terms of the lease called for Montana Corp. to
Montana Corp. on Dec 31, 2018 signed a 4 year noncancelable lease for certain machinery. The terms of the lease called for Montana Corp. to make equal annual payments of $7000 at at the end of each year for 4 years, with title to pass to Montana Corp. at the end of this period. The machinery has an estimated useful life of 4 years and no salvage value. Montana Corp. uses the straight-line method of depreciation for all of its fixed assets. The effective interest rate for the lease was 10%. With respect to this lease, 0should record for 2019? | Periods: Present value at 10% | | 1: 0.9091 | 2: 0.8264 | 3: 0.7513 | 4: 0.683 | 5: 0.6209 | 6: 0.5645 | 7: 0.5132 | 8: 0.4665 | 9: 0.4241 | 10: 0.3855 | 11: 0.3505 | 12: 0.3186 | 13: 0.2897 | 14: 0.2633 | 15: 0.2394 | 16: 0.2176 | 17: 0.1978 | 18: 0.1799 | 19: 0.1635 | 20: 0.1486 | Periods: Present value Annuity at 10% | | 1: 0.9091 | 2: 1.7355 | 3: 2.4868 | 4: 3.1698 | 5: 3.7907 | 6: 4.3552 | 7: 4.8684 | 8: 5.3349 | 9: 5.759 | 10: 6.1445 | 11: 6.495 | 12: 6.8136 | 13: 7.1033 | 14: 7.3666 | 15: 7.606 | 16: 7.8236 | 17: 8.0214 | 18: 8.2013 | 19: 8.3648 | 20: 8.5134
What is the interest expense and depreciation expense?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started