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Lease

This topic has 1 reply, 2 voices, and was last updated 7 years ago by MikeLittle.

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December 4, 2017 at 11:01 pm #420446
iyamu
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The Finance lease relates to a new piece of machinery . The fair value of the machine is $220,000 . The agreement requires blocks co to pay a deposit of $20,000 , on 1 January 2005 followed by five equal annual installments of $55,000 , starting on 31 dec 2005 . The implicit rate of interest is 11.65%.
What is the fiancé cost charged to profit or loss for the year ended 31 Dec 2006?
Answer $19,607 which I don’t understand. Pls assist
December 5, 2017 at 12:39 am #420477
MikeLittle
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11.65% * $200,000 = $23,300
$200,000 + $23,300 = $223,300
$223,300 – $55,000 = $168,300
$168,300 * 11.65% = $19,607
You really have to be very careful when you read dates … and use your fingers
This is a two year question!
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