On January 1, 2025, Oriole Corporation signed a ten-year noncancelable lease for certain machinery. The...
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On January 1, 2025, Oriole Corporation signed a ten-year noncancelable lease for certain machinery. The terms of the lease called for Oriole to make annual payments of $150015 at the end of each year for ten years with the title passing to Oriole at the end of this period. The machinery has an estimated useful life of 15 years and no salvage value. Oriole uses the straight-line method of depreciation for all of its fixed assets. Oriole accordingly accounted for this lease transaction as a finance lease. The lease payments were determined to have a present value of $962745 at an effective interest rate of 9%. With respect to this lease, Oriole should record for 2025
Select answer from the options below
| a. | lease expense of $150015.
| |
| b. | interest expense of $64183 and amortization expense of $54182.
| |
| c. | interest expense of $86647 and amortization expense of $64183 |
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