Question

ne of a macene by ageeing to pay the mnue of the Required The denthe and

Answer 1

1. Amount=$ 6145

Lease amount paid per year =$1000

Interest Rate= 10%, Number Of years=10 years

Present Value of the lease=(6.145* $1000)=$ 6145

2. The difference between the total amount paid and the present value of the lease payments is Interest

3. Amount of cost that is to be reported in the balance sheet is

In the balance sheet the leased asset is to be reported at the value which is is the lower of the present value of the lease payments in future or the leased asset’s fair market value.Since the fair market value is not given , it is reported at the present value of $6145