Smart Ltd negotiated a lease for equipment on the following terms: the lease had a 3 year term; the purchase price of the new equipment was R41 250; there were to be 3 annual payments of R15 000 payable in advance; and Smart Ltd was able to borrow at 10% per annum. The finance charge in the first year using the sum of the digits method would be Select one: O a. R2 500 O b. R4 125 O c. R15 000 O d. R1 500

Smart Ltd negotiated a lease for equipment on the following terms: the lease had a 3 year term; the purchase price of the new equipment was R41 250; there were to be 3 annual payments of R15 000 payable in advance; and Smart Ltd was able to borrow at 10% per annum. The finance charge in the first year using the sum of the digits method would be Select one: O a. R2 500 O b. R4 125 O c. R15 000 O d. R1 500

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter20: Accounting For Leases

Section: Chapter Questions

Problem 10GI: Owens Company leased equipment for 4 years at 50,000 a year with an option to renew the lease for 6...

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