Question
On January 2, 2021, Penelope Company leases equipment to Pes Co. with 5 equal annual payments of $164000 each, payable beginning January 2, 2021. Pes
On January 2, 2021, Penelope Company leases equipment to Pes Co. with 5 equal annual payments of $164000 each, payable beginning January 2, 2021. Pes Co. agrees to guarantee the $104000 residual value of the asset at the end of the lease term. The expected value of the residual is $0. Pess incremental borrowing rate is 11%, however it knows that Penelopes implicit interest rate is 9%. The journal entry Penelope makes at January 2, 2021 includes a debit to right-of-use asset for?
| PV Annuity Due | PV Ordinary Annuity | PV Single Sum | |
| 9%, 5periods | 4.23972 | 3.88965 | 0.64993 |
| 11%, 5periods | 4.10245 | 3.69590 | 0.59345 |
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Managerial Accounting
Authors: Ray Garrison, Eric Noreen, Peter Brewer
16th edition
1259307417, 978-1260153132, 1260153134, 978-1259307416
