At the beginning of the year, HIJ Corp. began to lease new equipment. This lease is being capitalized and its term has been set for 8 years. The rate implicit in the lease is 8.5% and thus, the original value of the capitalized lease is determined to be $712,000. If at the end of the year, the company is reporting a lease obligation of $652,000, what must be the annual total lease payments?
The correct answer is: b)
Total Lease Payment = Interest expense + Principal repayment
Step 1: Interest expense = 8.5% of 712,000 = 60,520
Step 2: Principal repayment = 712,000 - 652,000 = 60,000
Step 3: Total Lease Payment = 60,520 + 60,000 = $120,520
The best answer is 2. 1 is tempting, but wrong, because an asset "sounds like" a debit but the depreciation expense here ...
The correct answer is: a) (I) is incorrect. The rule is that if the Standards are more strict than local laws, yet they are ...
The correct answer is: a) This transaction will increase the assets of the company and its equity by the same amount. Hence, ...
The correct answer is e. The correct use the CFA abbreviation is one the most important things to know as a CFA candidate. ...
- No results found.