Question
On January 1, 2022, Gobert Corp. leases equipment from Mitchell, Inc. The lease calls for annual payments of $50,000 to be made every January 1
On January 1, 2022, Gobert Corp. leases equipment from Mitchell, Inc. The lease calls for annual payments of $50,000 to be made every January 1 from 2022 through 2029. The equipment has a ten year useful life.
Gobert guarantees a residual value of $20,000 at the end of the lease term. The equipment is expected to have a residual value of $30,000 at that time.
Mitchell's implicit rate, known to Gobert, is 5%. Gobert's incremental borrowing rate is 9%.
The entry to record the lease at inception will include a debit to Right-of-Use Asset of:
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Intermediate Accounting
Authors: Donald E. Kieso, Jerry J. Weygandt, And Terry D. Warfield
13th Edition
9780470374948, 470423684, 470374942, 978-0470423684
