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On January 2, 2005 Lafayette Machine Shops, Inc. s...

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On January 2, 2005 Lafayette Machine Shops, Inc. signed a 10-year noncancelable lease for a heavy-duty drill press, stipulating annual payments of $15,000 starting at the end of the fist year, with title passing to Lafayette at the expiration of the lease. Lafayette treated this transaction as a capital lease. The drill press has an estimated useful life of 15 years, with no salvage value. Lafayette uses straight-line depreciation for all its fixed assets. Aggregate lease payment were determined to have a present value of $92,170, based on implicit interest rate of 10%. What amount should Lafayette record for interest expense and depreciation expenses for 2005? Answer by filling the following worksheet template. ( Please see my attached Excel)

 

Paper#8707 | Written in 18-Jul-2015

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