Use the following data for a company leasing a machine with a capital lease: The lease period is ten years. The lease payments are $ 2980.59 at the end of each year. The firm will own the asset at the end of the lease term but the salvage value will be negligible. 8.5 % is the firm’ s incremental borrowing rate. 8% is the implicit lease rate. If the company uses straight-line depreciation, the first year’ s reported lease expense is:（）
A. $ 2635
B. $ 2980
C. $ 3600
参考答案：C
解析：
The reported annual lease expense for a capital lease is the depreciation of the asset value plus the annual interest on the remaining lease liability. We must use the lower rate, the implicit lease rate of 8%, to calculate the present value of the 10 lease payments, which is $ 20000. The annual interest is calculated using the 8% rate and the $ 20000 present value of the lease liability at the initiation of the lease. Depreciation (operating expense) =
=$ 20000 Interest expense(nonoperating expense) = $ 20000×0.08 = $1600 Total reported lease expense = $ 3600