Zang Services Inc. accounts for the lease of a truck. The lease includes a residual value guarantee

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Zang Services Inc. accounts for the lease of a truck. The lease includes a residual value guarantee at the end of the lease term of $16,000. Zang estimates that the likelihood that the residual value will be $16,000 has a 50% certainty. Zang feels that there is a 30% chance that the residual value will be $12,000 and a 20% chance that it will be $10,000. Calculate the probability-weighted value of the residual guarantee that needs to be included in the measurement of the lease payments liability recorded by Zang when the lease is signed.

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Intermediate Accounting Volume 1

ISBN: 978-1119496496

12th Canadian edition

Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Irene M. Wiecek, Bruce J. McConomy

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