Solution A:
Present value of lease payment = $24,000 * Cumulative PV factor at 5% for 4 periods of annuity due
= $24,000 * 3.72325
= $89,358
Amortization Table | ||||
Date | Lease payment | Effective interest | Decrease in balance | Outstanding balance |
Jan 1, year 1 | $89,358 | |||
Jan 1, year 1 | $24,000 | $0 | $24,000 | $65,358 |
Jan 1, year 2 | $24,000 | $3,268 | $20,732 | $44,626 |
Solution b:
Amount of lease liability to be reported at the end of first year = $65,358
Interest payable = $3,268
Chapter 15 Homework A Saved Help Save & Exit Submit Brief Exercise 15-4 (Algo) Finance lease;...
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