At the beginning of current year, Panorama Company leased a building form a lessor with the following pertinent information
Annual rental payable at the end of each year
1,000,000
Initial direct cost paid
400,000
Lease incentive received
100,000
Leasehold improvement
200,000
Purchase option that is reasonably certain to be exercised
500,000
Lease term
5 years
Useful life of building
8 years
Implicit interest rate
10%
PV of an ordinary annuity of 1 for 5 periods at 10%
3.79
Present value of 1 for 5 periods at 10%
0.62
1. What is the cost of the right of use asset?
a. 4,500,000
b. 4,400,000
c. 4,700,000
d. 4,600,000
2. What is the depreciation for current year?
a. 880,000
b. 900,000
c. 550,000
d. 575,000
3. What is the interest expense for current year?
a. 410,000
b. 379,000
c. 450,000
d. 429,000