Harry Potter Barn (HPB) leased equipment from Sorcerer's Leasing Co. on July 1, 2018, in a...
Harry Potter Barn (HPB) leased equipment from Sorcerer's Leasing Co. on July 1, 2018, in a finance lease. The present value of the lease payments discounted at 10% was $80,000. Ten annual lease payments of $12,000 are due each July 1, beginning July 1, 2018. The total decrease in earnings (pretax) inHPB’s Dec. 31, 2018, income statement would be:
a. $6,000.
b. $7,400.
c. $8,400.
d. $9,000.
Harry Potter Barn (HPB) leased equipment from Sorcerer's Leasing Co. on July 1, 2018, in an operating lease. The present value of the lease payments discounted at 10% was $80,000. Ten annual lease payments of $12,000 are due each July 1, beginning July 1, 2018. The total decrease in earnings (pretax) inHPB’s Dec. 31, 2018, income statement would be:
a. $6,000.
b. $7,400.
c. $8,400.
d. $9,000.
On January 1, 2018, Super Sports Supply recorded a right-of-use asset of $135,180 in an operating lease. The lease calls for ten annual payments of $20,000 at the beginning of each year. The interest rate charged by the lessor was 10%. The balance in the right-of-use asset at December 31, 2018, will be:
a. $115,180.
b. $121,662.
c. $126,698.
d. $135,180.
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