Reference no: EM132769430
Questions -
Q1. On January 1, 2020, H H borrowed $550,000 via a 10-year 7% per annum note payable with annual payments at the end of each year. What will Harris Horseshoes incur in interest for the fiscal year ended December 31, 2022?
$38,699
$32,732
None of the other options
$37,819
$35,713
Q2. W Corp. enters into a lease agreement on January 1, 2019 for a piece of equipment that requires annual payments of $50,000 for five years, with payments due on the last day of each year. Assume that this lease is recorded as an operating lease and that W uses a 6% interest rate. What is the present value of the lease obligation (as it would be reported on the balance sheet) on January 1, 2019 (within two dollars)?
$50,000
$149,452
None of the other options
$210,618
$250,000
Q3. Assume the same facts as in the previous question except that Western records this lease as a financing lease. What is the present value of the lease obligation (as it would be reported on the balance sheet) on January 1, 2019 (within two dollars)?
$50,000
$149,452
$250,000
$210,618
None of the other options
Q4. K enters into a lease agreement on January 1, 2018 for a piece of equipment that requires annual payments of $20,000 for five years, with each payment due on December 31 of each year. What is the difference in the total expense for 2018 associated with this lease agreement if it is recorded as a finance rather than as an operating lease, rounded to the nearest dollar? Assume that K uses a 6% interest rate.
None of the other options
Finance lease is $5,055 higher
$0
Operating lease is $16,849 higher
Finance lease is $1,904 higher