On January 1, 2019, Maxine Company entered into a five-year lease of an office space with the following terms: Annual rental for the first two years payable every December 31 100,000 Annual rental for the next three years payable every December 31 200,000 Implicit rate in the lease 10% PV of an ordinary annuity of 1 at 10% for 2 periods 1.734 PV of an ordinary annuity of 1 at 10% for 3 periods 2.487 PV of 1 at 10% for 2 periods 0.826 The lease provides for neither a transfer of title to the lessee nor purchase option.

1. What is the lease liability on December 31, 2019? A. 497,400 B. 584,252 C. 670,800 D. 800,000

2. What is the depreciation of the right of use asset for 2019? A. 116,850 B. 134,160 C. 160,000 D. 223,650

3. What is the interest expense for 2021? A. 18,696 B. 34,664 C. 49,695 D. 54,268

4. What is the lease liability on December 31, 2021? A. 251,937 B. 346,640 C. 410,852 D. 496,945

with solution