(Answered) Question - on january 1 2019 coleus corporation entered

Accounting

Question - On January 1, 2019, Coleus Corporation entered into a ten-year lease agreement to be accounted for as a finance lease under ASC 842. The following summarizes the agreement:

• Payments of $30,000 are due at the beginning of each year; the first payment was made on January 1, 2019.

• The leased asset has an estimated useful life of 15 years.

• The implicit interest rate in the lease is known by Coleus to be 10%.

• Coleus's incremental borrowing rate is 12%.

• Coleus uses the straight-line depreciation method.

• The asset's estimated salvage value is $50,000 after 10 years and is $15,000 after 15 years.

Required:

1. Determine the interest expense associated with the lease for the year ended December 31, 2019.

2. Determine the amortization expense for the year ended December 31, 2019.

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