Red Co. recorded a residual asset of $100,000 in a 10-year lease under which no profit was recorded at commencement by the lessor. The interest rate charged the lessee was 10%. Under the new ASU, the balance in the residual asset after two years will be:
A)$80,000.
B)$90,000.
C)$110,000.
D)$121,000.

Question

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The Answer of Red Co. recorded a residual asset of $100,000 in a 10-year lease under which no profit was recorded at commencement by the lessor. The interest rate charged the lessee was 10%. Under the new ASU, the balance in the residual asset after two years will be:
A)$80,000.
B)$90,000.
C)$110,000.
D)$121,000.

Red Co Recorded a Residual Asset of $100,000 in a 10-Year