ANSWER
Period | Lease payment | PV Factor @10% | Present Value |
1 | 22,000 | 1 | 22,000 |
2 | 22,000 | 0.9091 | 20,000 |
3 | 22,000 | 0.8264 | 18,181 |
4 | 22,000 | 0.7513 | 16,529 |
5 | 22,000 | 0.6830 | 15,026 |
6 | 22,000 | 0.6209 | 13,660 |
7 | 22,000 | 0.5645 | 12,419 |
8 | 22,000 | 0.5132 | 11,290 |
9 | 22,000 | 0.4665 | 10,263 |
Total | 198,000 | 139,368 |
1.) | Amount $ | ||
Interest Expense | -11,737 | (139,368-22,000)*10% | |
Amortization expense | -15,485 | (139,368/9) | |
Effect on Earnings | -27,222 | ||
2). | Right of use asset balance ( end of year ) | $ 123,883 | =139,368-15,485 |
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