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Current Attempt in Progress On January 1,2023, Sunland Corp. signed a ten-year non-cancellable lease...

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Accounting

Current Attempt in Progress
On January 1,2023, Sunland Corp. signed a ten-year non-cancellable lease for new machinery. The terms of the lease called
for Sunland to make annual payments of $97000 at the end of each year for ten years, with title to pass to Sunland at the end
of the lease period. Sunland accordingly accounted for this lease transaction as a finance lease. The machinery has an
estimated useful life of 15 years and no residual value. Sunland uses straight-line depreciation for all its property, plant and
equipment. The lease payments were determined to have a present value of $650878 at an effective interest rate of 8%. It
was also determined that the fair value of the machinery on January 1,2023 was $669000. With respect to this lease, for the
year ending December 31,2023, Sunland should report (rounded to the nearest dollar)
lease expense of $97000, and depreciation expense of $43392.
interest expense of $52070 and depreciation expense of $43392.
interest expense of $53822 and depreciation expense of $45144.
interest expense of $52070 and depreciation expense of $6508.
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