Question

can someone please explain how they got these answers thanks so much.

Multiple Choice Questions 1. CDE leased equipment from HIJ on December 31, 20x11, for a 10-year period (also the useful life of the asset). Equal annual payments under the lease are $30.000 and are due on December 31 of each year. The first payment was made on December 31, 20x11, and the second payment was made on the next due date December 31, 20X12. The present value at December 31, 20x11, of the minimum lease payments over the lease term discounted at 10 percent (the implicit rate computed by HIJ and known by CDE) was $202,771. The lease is appropriately accounted for as a finance lease by CDE. What would be the interest expense on the lease liability for the fiscal year ended on December 31, 2012? A. $20,277 B. $17,772 C $30,000 D. $17,277 20277.1 3000

Answer 1

Amortization Schedule Annual Lease expense Year Interest @10% on outstanding Balance (Col. 3) Reduction in Balance (Col. 2-Col.3) Outstanding Balance 12/31/20x11 31 12/31/20X11 32 12/31/20X12 33 1/1/2022 34 Answer D) $17,277 30,000.00 30,000.00 30,000.00 202,771 172,771 190,048 30,000 12,723 10,995 17,277 19,005 Outstanding Balance Add Interest Balance in CDE's Liability 172771 17277 190048 39 40 41 3) 42 43 44 Annual Rent Payment Less Interest Current Portion of Long term Lease 30,000 (19,005) 10,995 45 Answer None of the above Answer B) record rental expense of $250 for the first Year's rental 46 47 4) 48 49 5) Answer D) Asset and a Liability. 50