Question

On January 1, 2021, Ivanhoe Corporation signed a 10-year noncancelable lease for certain machinery. The terms of the lease called for Ivanhoe to make annual payments of $230000 at the end of each year for 10 years with the title passing to Ivanhoe at the end of this period. The machinery has an estimated useful life of 15 years and no salvage value. Ivanhoe uses the straight-line method of depreciation for all of its fixed assets. Ivanhoe accordingly accounted for this lease transaction as a financial lease. The lease payments were determined to have a present value of $1543,319 at an effective interest rate of 8%. With respect to this lease, Ivanhoe should record for 2021:
a. lease expense of 200,000.
b. interest expense of 89,468 and depreciation expense of 76,136.
c. Interest expense of 107,361 and depreciation expense of 89, 468.
d. interest expense of 91,363 and depreciation expense of 134,202.

Answer 1

ha IvAnHoe

yeah sorry i dont know the answer i just thought it was funny lol