Question
On January 1, Year1 JoJo Trucking Company leased a semitractor and trailer for five years. Annual payments of $ 30862 are to be made every
On January 1, Year1 JoJo Trucking Company leased a semitractor and trailer for five years. Annual payments of $30862 are to be made every December 31, beginning December 31, Year1. Interest expense is based on a rate of 6%. JoJo has determined that this is an OPERATING lease. JoJo has computed the following amortization table for the lease liability:
Date | Lease Payment | Interest Expense | Reduction of Obligation | Lease Obligation |
1/01/Yr1 |
|
|
| 130000 |
12/31/Yr1 | 30862 | 7800 | 23062 | 106938 |
12/31/Yr2 | 30862 | 6416 | 24446 | 82492 |
12/31/Yr3 | 30862 | 4950 | 25912 | 56580 |
12/31/Yr4 | 30862 | 3395 | 27467 | 29113 |
12/31/Yr5 | 30862 | 1749 | 29113 | 0 |
1. What will JoJo report as a Right-of-use asset at the inception of the lease?
2. What is total expense reported with respect to this lease for Year1 (include interest expense and amortization expense for the right-of-use asset.)
3. What is total expense reported with respect to this lease for Year2 (include interest expense and amortization expense for the right-of-use asset.)
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