On January 1, 2021, Freshbooks Industries Signed an 18-Year Lease

question 55

Multiple Choice

On January 1, 2021, Freshbooks Industries signed an 18-year lease for heavy equipment. The lease is accounted for by Freshbooks as a finance lease. The lease required annual payments of $19,000 beginning December 31, 2021. The heavy equipment has an estimated useful life of 20 years, with $2,000 residual value. Freshbooks uses straight-line depreciation for all its plant assets. The lease payments have a present value of $159,000, based on a 10% interest rate
-How much interest expense should Freshbooks report for the lease on its 2021 income statement?

• A)$19,000
• B)$1,900
• C)$14,000
• D)$15,900
• E)NONE

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Definitions:

Fight-or-Flight Response

A physiological reaction that occurs in response to a perceived harmful event, attack, or threat to survival.

Tend-and-Befriend Response

A behavior exhibited by some individuals under stress, characterized by nurturing activities designed to protect oneself and one's offspring, and forming social alliances rather than fighting or fleeing.

Great Stress

An intense state of physical or emotional strain or tension resulting from adverse or demanding circumstances.

Immune Function

The biological processes and mechanisms within an organism that protect against disease by identifying and killing pathogens and tumor cells.