Reference no: EM132845331

PROPLEM 1 - Red Co. recorded a right-of-use asset of $100,000 in a 10-yearType lease. Payments of $16,275 are made annually at the end of each year. The interest rate charged by the lessor was 10%. Under the new ASU, the balance in the lease payable after two years will be?

PROPLEM 2 - Red Co. recorded a right-of-use asset of $165,000 in a 10-year finance lease. Payments of $26,853 are made annually at the end of each year. The interest rate charged by the lessor was 10%. The balance in the lease payable after two years will be?

PROPLEM 3 - On January 1, 2018, Ogleby Corporation signed a five-year noncancelable lease for equipment. The terms of the lease called for Ogleby to make annual payments of $180,000 at the beginning of each year for five years with title passing to Ogleby at the end of this period. The equipment has an estimated useful life of 7 years and no salvage value. Ogleby uses the straight-line method of depreciation for all of its fixed assets. Ogleby accordingly accounts for this lease transaction as a capital lease. The minimum lease payments were determined to have a present value of $750,578 at an effective interest rate of 10%.

1. With respect to this capitalized lease, for 2019 Ogleby should record

a. interest expense of $57,058 and depreciation expense of $107,225.

b. interest expense of $75,058 and depreciation expense of $107,225.

c. interest expense of $44,764 and depreciation expense of $107,225.

d. interest expense of $62,764 and depreciation expense of $107,225.

PROPLEM 4 - On December 1, 2018, Pharoah Corporation leased office space for 10 years at a monthly rental of $84000. On that date Pharoah paid the landlord the following amounts: $84000 Rent deposit 84000 First month's rent 84000 Last month's rent 672000 Installation of new walls and offices $924000 The entire amount of $924000 was charged to rent expense in 2018. What amount should Pharoah have charged to expense for the year ended December 31, 2018?