Question
On January 2, 2021, Oriole Leasing Company leases equipment to Foley Co. with 5 equal annual payments of $151000 each, payable beginning January 2, 2021.
On January 2, 2021, Oriole Leasing Company leases equipment to Foley Co. with 5 equal annual payments of $151000 each, payable beginning January 2, 2021. Foley Co. agrees to guarantee the $91000 residual value of the asset at the end of the lease term. The expected value of the residual is $0. Foleys incremental borrowing rate is 11%, however it knows that Orioles implicit interest rate is 9%. The journal entry Oriole makes at January 2, 2021 includes a debit to right-of-use asset for?
PV Annuity Due | PV Ordinary Annuity | PV Single Sum | |
9%, 5 periods | 4.23972 | 3.88965 | 0.64993 |
11%, 5 periods | 4.10245 | 3.69590 | 0.59345 |
| $673474 |
| $694202 |
| $973152 |
| $699341 |
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