Question

w ent of Westhough Chapter 15.18 19 On January 2018 Packard Corporation based upon to company Tho m a s The first part of $56.000 wa madonnay 2018 m g payments are made on December 31 each year, beg g with December 31 2018 The egument cost Packard Corporation $2.842.100 The present value of the lease payments $3082100. The lease is appropriately classified as a sales type lease Assuming the interest rate for this lease is 10%, what will be the balance reported as a betty by Hewitt in the December 31 2019, balance sheet Hound final answer to the nearest dollar) O $2219 O O O

Answer 1

Solution:

Lease Amortization Table
Date	Lease payment	Interest expense	Reduction in Balance	Carrying value
Start				$3,082,100
1-Jan-18	$456,000	$0	$456,000	$2,626,100
31-Dec-18	$456,000	$262,610	$193,390	$2,432,710
31-Dec-19	$456,000	$243,271	$212,729	$2,219,981

Hence first option is correct.