How much interest expense should DuMont report for the lease on its 2018 income statement?
A) $19,000
B) $14,000
C) $1,900
D) $15,900
E) NONE

Question

Quizplus · Accepted Answer

Interest expense for the lease is calculated as the lease payment multiplied by the discount rate. The discount rate is 10%, and the lease payment is $15,900. Therefore, the interest expense for the lease is $15,900 x 10% = $1,590.

How Much Interest Expense Should DuMont Report for the Lease