On January 1, 2018, Betty DeRose, Inc. leased office furniture and equipment fro
ID: 2520340 • Letter: O
Question
On January 1, 2018, Betty DeRose, Inc. leased office furniture and equipment from Young Leasing Company. The terms of the lease require annual payments of $50,000 for 10 years with the first payment being due on December 31, 2018. Assume the interest rate on the lease is 10% and the lease qualifies as a capital lease. Betty DeRose depreciates all assets using the double-declining balance method. Calculate the total amount of expense related to this lease reported on Betty's 2019 income statement. Use the time value of money factors posted in canvas to answer this question. To access these factors, click modules and then scroll to week 11. Click on the link labeled present & future value table factors. No credit will be awarded for this question using a means other than these table factors to answer this question.
Explanation / Answer
Working Note
TOTAL EXPENSES TO BE REPORTED ON BETTY'S 2019 INCOME STATEMENT DESCRIPTION AMOUNT INTEREST EXPENSES $28,795.00 DEPERICATION EXPENSES (90770 / 10 YEARS) $49,157.00 TOTAL EXPENSES $77,952.00