What amount should harrow report as interest expense

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Reference no: EM132775857

Problem 1: On January 1, 20X1, Harrow Co. as lessee signed a five-year noncancelable equipment lease with annual payments of $100,000 beginning December 31, 20X1. Harrow treated this transaction as a finance lease. The five lease payments have a present value of $379,000 at January 1, 20X1, based on interest of 10%. What amount should Harrow report as interest expense for the year ended December 31, 20X1?

A. $37,900

B. $27,900

C. $24,200

D. $0

Reference no: EM132775857

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