Lease term: 4 years Estimated useful life of the equipment: 4 years Annual lease payments (beginning of
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Question:
Lease term: | 4 years |
Estimated useful life of the equipment: | 4 years |
Annual lease payments (beginning of each year): | $16,513.30 |
Fair value of the equipment: | $65,000 |
Guaranteed / expected residual value of equipment: | $2,000 |
Implicit return on lease (known to Dustin Henderson): | 3% |
Manufacturing cost of equipment (for Mad Max): | $43,000 |
Assuming Dustin Henderson (the lessee) classifies the lease as a financing lease, how much interest expense will Dustin Henderson record on 12/31/20 (i.e., at the end of year1)?You may round your answer to the nearest dollar (make your answer positive).
Related Book For
Intermediate accounting
ISBN: 978-0077647094
7th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson
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