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What amount of interest expense should row co recognize

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Question - On January 1, 20x1, Row Co. leased a machine from Boat, Inc. Information on the lease is as follows:

Annual rent payable at the beginning of each year 200,000

Lease term 10 years

Useful life of machine 12 years

Implicit interest rate 10%

The lease contract provides Row Co. an option to purchase the machine at the end of the lease term for 100,000. The option price approximates the machine's expected fair value at the end of the lease. Row Co. is reasonably certain to the exercise the option. What amount of interest expense should Row Co. recognize on the lease in 20x1?

Reference no: EM133149969

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