ANSWER
1): | |
Right to use assets | |
Annual lease payment | 27,000 |
*cumulative PV factor for annuity due at 10% for 9 periods | 6.334926 |
Right to use assets | 171,043 |
Interest expesne [(171,043-27,000)*10%] | -14,404.3 |
Amortization for the year (27,000- Interest expense) | -12,595.7 |
Effect on earnings for first year | -27,000 |
2): | |
Lease payable balance (End of year) | |
beginning balance | 171,043 |
Add: Interest expense | 14,404 |
less: Payments (annual payment *2) | 54,000 |
Lease payable balance (end of year) | 131,447 |
Right of use asset balance (end of year) | |
beginning balance | 171,043 |
Less: Amortization | 12,596 |
Right of use asset balance (end of year) | 158,447 |
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