Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. haystack, inc. manufactures machinery used in the

Haystack, Inc. manufactures machinery used in the mining industry. On January 2,2025 it leased equipment...

60.1K

Verified Solution

Question

Accounting

Haystack, Inc. manufactures machinery used in the mining industry. On January 2,2025 it leased equipment to Silver Point Co in a 5-year lease that requires equal annual payments of $180,855 on January 1 of each year with the first payment due on January 2,2025. Silver Point's incremental borrowing rate is 10%. The rate implicit in the lease is 8%, which is known to Silver Point Co. What is the amount of interest expense recorded by Silver Point Co. for the year ended December 31,2025?
\table[[,PV Annuity Due,PV Ordinary Annuity,PV Single Sum],[8%,5 periods,4.31213,3.99271,.68508],[10%,5 periods,4.16986,3.79079,.62092]]
A) $47,929 CORRECT ANSWER
B) $78,000
C) $56,160
D) $62,400
Please show work
image

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students