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Carla Vista Corporation enters into an agreement with Bramble Rentals Co. on January 1, 2025 to lease a machine to be used in its manufacturing
Carla Vista Corporation enters into an agreement with Bramble Rentals Co. on January 1, 2025 to lease a machine to be used in its manufacturing operations. The following data pertain to the agreement: (a) The term of the noncancelable lease is 3 years with no renewal option. Payments of $699501 are due on January 1 of each year. (b) The fair value of the machine on January 1,2025 , is $1930000. The machine has a remaining economic life of 10 years, with no salvage value. The machine reverts to the lessor upon the termination of the lease. (c) Carla Vista depreciates all machinery it owns on a straight-line basis. (d) Carla Vista's incremental borrowing rate is 11% per year. Carla Vista does not know the 9% implicit rate used by Bramble. If Bramble records this lease as a sales-type lease, what amount would be recorded as Lease Receivable at the inception of the lease? $1930000$2098503$1897410$699501
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