On January 1, 2020, X-Man Corp. signed a ten-year non-cancellable lease for new machinery. The terms...

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On January 1, 2020, X-Man Corp. signed a ten-year non-cancellable lease for new machinery. The terms of the lease called for X-Man to make annual payments of $100,000 at the end of each year for ten years, with title to pass to X-Man at the end of the lease period. X-Man accordingly accounted for this lease transaction as a finance lease. The machinery has an estimated useful life of 15 years and no residual value. X-Man uses straight-line depreciation for all of its property, plant and equipment. The lease payments were determined to have a present value of $671,008 at an effective interest rate of 8%. It was also determined that the fair value of the machinery on January 1, 2020 was $674,000. With respect to this lease, for the year ending December 31, 2020, X-Man should report (rounded to the nearest dollar) lease expense of $100,000, and depreciation expense of $44,734. O interest expense of $53,681 and depreciation expense of $44,734. interest expense of $53,920 and depreciation expense of $44,933. O interest expense of $53,681 and depreciation expense of $67,101. O O O O On January 1, 2020, X-Man Corp. signed a ten-year non-cancellable lease for new machinery. The terms of the lease called for X-Man to make annual payments of $100,000 at the end of each year for ten years, with title to pass to X-Man at the end of the lease period. X-Man accordingly accounted for this lease transaction as a finance lease. The machinery has an estimated useful life of 15 years and no residual value. X-Man uses straight-line depreciation for all of its property, plant and equipment. The lease payments were determined to have a present value of $671,008 at an effective interest rate of 8%. It was also determined that the fair value of the machinery on January 1, 2020 was $674,000. With respect to this lease, for the year ending December 31, 2020, X-Man should report (rounded to the nearest dollar) lease expense of $100,000, and depreciation expense of $44,734. O interest expense of $53,681 and depreciation expense of $44,734. interest expense of $53,920 and depreciation expense of $44,933. O interest expense of $53,681 and depreciation expense of $67,101. O O O O

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Present value of Lease payment on Jan12020 6... View the full answer