Question
On January 1, 2018, Ivanhoe Corporation signed a 5-year noncancelable lease for equipment. The terms of the lease called for Ivanhoe to make annual payments
On January 1, 2018, Ivanhoe Corporation signed a 5-year noncancelable lease for equipment. The terms of the lease called for Ivanhoe to make annual payments of $202000 at the beginning of each year for 5 years beginning on January 1, 2018 with the title passing to Ivanhoe at the end of this period. The equipment has an estimated useful life of 7 years and no salvage value. Ivanhoe uses the straight-line method of depreciation for all of its fixed assets. Ivanhoe accordingly accounts for this lease transaction as a finance lease. The minimum lease payments were determined to have a present value of $842313 at an effective interest rate of 10%. In 2019, Ivanhoe should record interest expense of
Answer: (round to the nearest whole dollar)
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