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On December 30, year 1, Kelty Corporation signed an agreement to lease equipment for ten years. The lease payment of exist70,000 are due each month
On December 30, year 1, Kelty Corporation signed an agreement to lease equipment for ten years. The lease payment of exist70,000 are due each month on December 30. Kelty paid its first lease payment immediately after the lease was signed. The interest rate was 6%. The FMV of the equipment on December 30, year 1, was exist600,000. At the end of the lease term, Kelty may exercise a BPO to purchase the equipment for exist10,000. The asset has a useful life of twelve years. Kelty uses the net method of recording lease obligations. The present value of the minimum lease payments is exist551702. Determine the following amounts to be recognized in the financial statements. Interest expense for year 2 Interest expense for year 3 Carrying value or lease on 12/31/Y3 Depreciation expense for year 2
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