A city government has a nine-year capital lease for property being used within the General Fund. The lease was signed on January 1, 2010. Minimum lease payments total $90,000 starting at the end of the first year but have a current present value of $69,000. Annual payments are $10,000, and the interest rate being applied is 10 percent. When the first payment is made on December 31, 2010, which of the following recordings is made?
Government-Wide Statements | Fund-Based Statements | |
a. | Interest Expense $–0– | Interest Expense $–0– |
b. | Interest Expense $6,900 | Expenditures $6,900 |
c. | Expenditures $10,000 | Expenditures $10,000 |
d. | Interest Expense $6,900 | Expenditures $10,000 |
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