On January 2, 20X5, Dix Machine Shops, Inc. signed a 10-year noncancelable lease for a heavy-duty drill press. The lease stipulated annual payments of $30,000 starting at the end of the first year, with the title passing to Dix at the expiration of the lease. Dix treated this transaction as a lease. The drill press has an estimated useful life of 15 years, with no salvage value. Dix uses straight-line depreciation for all of its fixed assets. Aggregate lease payments were determined to have a present value of $180,000, based on implicit interest of 10%. In its 20X5 income statement, what amount of interest expense should Dix report from this lease transaction?
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On January 2, 20X5, Dix Machine Shops, Inc. signed a 10-year noncancelable lease for a heavy-duty dr...
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