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On January 1, year 9, Blue Co. leased a new machine from Green Co. The following information pertains to the lease: 5 years $55,000 7
On January 1, year 9, Blue Co. leased a new machine from Green Co. The following information pertains to the lease: 5 years $55,000 7 years 12% Lease term Annual rental payable at beginning of each year Useful life of machine Blue's incremental borrowing rate Implicit interest rate in lease (known by Blue) Present value of annuity of $1 in advance for 5 periods at 10% 12% 10% 4.17 4.04 There is no bargain purchase option but title transfers to Blue Co, at the end of the lease. The cost of the machine on Green's accounting records is $294,500. At the beginning of the lease term, Blue Co should record a lease llability of
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