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02-01-2023
Business

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On january 1, 2021, wildhorse corporation signed a five-year noncancelable lease for equipment. the terms of the lease called for wildhorse to make annual payments of $165000 at the beginning of each year for 5 years with title passing to wildhorse at the end of this period. the equipment has an estimated useful life of 7 years and no salvage value. wildhorse uses the straight-line method of depreciation for all of its fixed assets. wildhorse accordingly accounts for this lease transaction as a finance lease. the lease payments were determined to have a present value of $676904 at an effective interest rate of 11%. with respect to this capitalized lease, for 2021 wildhorse should record: _________

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