Questions 14 and 15 are based on the following information:
On 1/1/21, VWX Inc entered into a 6 year equipment lease requiring 1 payment of $25,000 per year, in advance. At the end of the lease term VWX will receive title to the equipment. The interest rate on the lease is 10%.
14. The lease will be capitalized for
a) $108,883 b) $119,770 c) $94,770 d) $133,883
15. A finance lease requiring annual payments of $20,000, in advance, was capitalized for $120,000 on 1/1/21. The interest rate on the lease is 7%. The 12/31/21 Lease Liability balance (after the 2nd lease payment of $20,000) will be,
a) $87,000 b) $80,000 c) $100,000 d) $95,988
