Question
Cullumber Cosmetics, Inc. has entered into a leasing agreement to rent equipment from Martinez Leasing services. There is no transfer of title, there is not
Cullumber Cosmetics, Inc. has entered into a leasing agreement to rent equipment from Martinez Leasing services. There is no transfer of title, there is not a bargain purchase option, and the economic life test is not met. Based on the following information, what amount would be used in the 90% test for the present value of the lease payments for the lessee?
| Annual Payments (1st day of the period) | $54900 |
| Lease Term | 5 years |
| Guaranteed Residual Value | $13800 |
| Incremental Borrowing Rate (lessor implicit rate is not known) | 8% |
| PV Annuity Due | PV Ordinary Annuity | PV Single Sum | ||||
|---|---|---|---|---|---|---|
| 6%, 5 periods | 4.46511 | 4.21236 | 0.74726 | |||
| 8%, 5 periods | 4.31213 | 3.99271 | 0.68058 | |||
| 10%, 5 periods | 4.16986 | 3.79079 | 0.62092 |
$288300
$274500
$236736
$246128
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Managerial Accounting Tools For Business Decision Making Wileyplus Lms Student Package
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
8th Edition
1119390249, 978-1119390244
