Refer to the following lease amortization schedule The 10 pa

Refer to the following lease amortization schedule. The 10 payments are made annually starting with the beginning of the lease. Titile does not transfer to the lessee and there is no purchase option or guaranteed residual value. The asset has an expected economic life of 12 years. The lease is noncancelable. Cash Effective Interest Outstanding Balance 108,703 93,703 86,200 78,096 69,343 59,891 49,682 38,656 26,749 Decrease n balance PaymentPayment 1 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 7,496 6,896 6,248 5,547 4,791 3,975 3,093 15,000 7,504 8,104 8,752 9,453 10,209 11,025 11,907 2 3 4. 5 6 8 9 10 What amount would the lessee record as annual amortization on the right-of-use asset using the straight-line method? (Round your answer to the nearest dollar.) K Prev 10 of 14Next > ENG to search

Solution

payment cash payment effective interest decreasein balance outstanding balance 8 15000 3093 11907 26749 9 15000 2140 12860 13889 10 15000 1111 13889 Nil total of opening balance(cost) plus all interest of 10 years comes 150000 As such annual amortization by straight line method TRUE