The balance of the interest payable account related to this lease transaction on lessee's balance sheet on December 31, 2010 should be
$6,753
$6,603
$6,202
$6,802
Homework Answers
Answer:
Option (C) $6202
Present value of Lease
| Year | Particulars | Value | PV factor @10% | Present Value |
| 1 | Lease rent | 18000 | 1 | 18000 |
| 2 | Lease rent | 18000 | 0.909 | 16364 |
| 3 | Lease rent | 18000 | 0.826 | 14876 |
| 4 | Lease rent | 18000 | 0.751 | 13524 |
| 5 | Lease rent | 18000 | 0.683 | 12294 |
| 5 | Residual value | 8000 | 0.621 | 4967 |
| 80025 |
Payment Schedule:
| Date | Opening Balance | Payment | Interest | Principal | Closing Principal |
| 01/01/2010 | 80025 | 18000 | 18000 | 62025 | |
| 01/01/2011 | 62025 | 18000 | 6202 | 11798 | 50227 |
| 01/01/2012 | 50227 | 18000 | 5023 | 12977 | 37250 |
| 01/01/2013 | 37250 | 18000 | 3725 | 14275 | 22975 |
| 01/01/2014 | 22975 | 18000 | 2298 | 15702 | 7273 |
| 31/12/2014 | 7273 | 8000 | 727 | 7273 | 0 |
Add Answer to:
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