Question

Red Co. recorded a right-of-use asset of $100,000 in a 10-year finance lease. Payments of $16,275 are made annually at the end of each year. The interest rate charged by the lessor and known by Red was 10%. The balance in the lease payable after two years will be:
a) $80,000b) $116,309c) $86,823d) $121,000

Answer 1

Answer:

c) $86,823

Explanation:

The balance in the lease payable after two years will be: $86,823