On January 2, 2021, Blossom, Inc. signed a 10-year noncancelable lease for a heavy duty drill press. The lease stipulated annual payments of $280000 starting at the beginning of the first year, with title passing to Blossom at the expiration of the lease. Blossom treated this transaction as a finance lease. The drill press has an estimated useful life of 15 years, with no salvage value. Blossom uses straight-line amortization for all of its
On January 2, 2021, Blossom, Inc. signed a 10-year noncancelable lease for a heavy duty drill press. The lease stipulated annual payments of $280000 starting at the beginning of the first year, with title passing to Blossom at the expiration of the lease. Blossom treated this transaction as a finance lease. The drill press has an estimated useful life of 15 years, with no salvage value. Blossom uses straight-line amortization for all of its
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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On January 2, 2021, Blossom, Inc. signed a 10-year noncancelable lease for a heavy duty drill press. The lease stipulated annual payments of $280000 starting at the beginning of the first year, with title passing to Blossom at the expiration of the lease. Blossom treated this transaction as a finance lease. The drill press has an estimated useful life of 15 years, with no salvage value. Blossom uses straight-line amortization for all of its plant assets. Aggregate lease payments were determined to have a present value of $1720479, based on implicit interest of 10%.
In its 2021 income statement, what amount of amortization expense should Blossom report from this lease transaction?
In its 2021 income statement, what amount of amortization expense should Blossom report from this lease transaction?
$280000
$114699
$142699
$172048
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