Question
The Harris Company is the lessee on a four-year lease with the following payments at the end of each year: Year 1: $ 11,000 Year
The Harris Company is the lessee on a four-year lease with the following payments at the end of each year:
| | | |
| Year 1: | $ | 11,000 |
| Year 2: | $ | 16,000 |
| Year 3: | $ | 21,000 |
| Year 4: | $ | 26,000 |
| | ||
An appropriate discount rate is 7 percentage, yielding a present value of $61,233.
a-1. If the lease is an operating lease, what will be the initial value of the right-of-use asset?
a-2. If the lease is an operating lease, what will be the initial value of the lease liability?
a-3. If the lease is an operating lease, what will be the lease expense shown on the income statement at the end of year 1?
a-4. If the lease is an operating lease, what will be the interest expense shown on the income statement at the end of year 1?
a-5. If the lease is an operating lease, what will be the amortization expense shown on the income statement at the end of year 1?
b-1. If the lease is a finance lease, what will be the initial value of the right-of-use asset?
b-2. If the lease is a finance lease, what will be the initial value of the lease liability?
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Finite Mathematics and Its Applications
Authors: Larry J. Goldstein, David I. Schneider, Martha J. Siegel, Steven Hair
12th edition
978-0134768588, 9780134437767, 134768582, 134437764, 978-0134768632
