Multiple Choice
Mega Corporation leases machinery on January 1, 2016. The lease is for a period of 7 years, which is the useful life of the machinery. The implicit rate of interest is 10% and the Obligation under Capital Lease is recorded at $48,197. The lease requires annual payments of $9,000, with the first payment due at the inception of the lease. How much interest expense should be accrued on December 31, 2016?
A) $3,920
B) $0
C) $9,000
D) $4,820
Correct Answer:
Verified
Correct Answer:
Verified
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