The Following Information Is Available from the Comparative Balance Sheets

The following information is available from the comparative balance sheets and related income statement of the Horner Company for the year ended December 31, Year 7.
$\begin{array}{lll}&\text { December } 31, & \text { December } 31, \\&\text { Year } 6 & \text { Year } 7\\\text { Present value of lease obligation } & \$ 2,040,508.60 & \$ 1,862,939.10 \\\text { Leasehold (net of accumulated amortization) } & \$ 1,987,224.30 & \$ 1,766,421.60 \\\text { Interest expense on lease obligation for Year 7 } & & \$ 122,430.52\end{array}$ The company has only one lease contract outstanding, which it entered into on January 1, Year 6.The contract called for 10 equal lease payments commencing on December 31, Year 6.
Required:
a. What was the interest rate used to value the lease?
b. What is the annual lease payment?
c. What was the present value of the lease obligation on January 1, Year 6?
d. What was the amortization expense for Year 6?

Correct Answer:

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