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What is the interest expense for the current year

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On January 1, 2017, Panorama Company leased a building from a lessor with the following pertinent information:

Annual rental payable at the end of each year                        1,000,000

Initial direct cost paid                                                           400,000

Lease incentive received                                                      100,000

Leasehold improvement                                                         200,000

Purchase option that is reasonably certain to be exercised          500,000

Lease term 5 years

Useful life of the building 8 years

Implicit interest rate 10%

Pv of an ordinary annuity of 1 for 5 at 10% 3.79

Present value of 1 for 5 at 10% 0.62

Question A. What is the cost of the right of use?

Question B. What is the depreciation for the current year?

Question C. What is the interest expense for the current year?

Question D. What is the lease liability at year end?

Reference no: EM132531267

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