Question

I.D. Clair Co. recorded a right-of-use asset of $100,000 in a 10-year operating lease. Payments of $14,795 are made annually at January 1 of each year beginning January 1, 2021. The interest rate charged by the lessor was 10%. The balance in the right-of-use asset at December 31, 2021, will be: (Round your answer to the nearest whole dollar amount.)

Answer 1

Answer:

$93,528

Explanation:

The computation of balance in the right-of-use asset is shown below:-

Lease Balance                  $100,000

Less: Paid installment       $14,975

                                          $85,025

Interest                               $8,503

($85,025 × 10%)

Amount to be amortize     $6472

($14,975 - $8,503)

Balance of year end          $93,528

($100,000 - $6,472)