Question
On January 2, 2021, Sunland Leasing Company leases equipment to Foley Co. with 5 equal annual payments of $154000 each, payable beginning January 2, 2021.
On January 2, 2021, Sunland Leasing Company leases equipment to Foley Co. with 5 equal annual payments of $154000 each, payable beginning January 2, 2021. Foley Co. agrees to guarantee the $94000 residual value of the asset at the end of the lease term. The expected value of the residual is $0. Foley’s incremental borrowing rate is 11%, however it knows that Sunland’s implicit interest rate is 9%. The journal entry Sunland 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
$687562
$708701
$714010
$997540
On January 2, 2021, Sunland Leasing Company leases equipment to Foley Co. with 5 equal annual payments of $154000 each, payable beginning January 2, 2021. Foley Co. agrees to guarantee the $94000 residual value of the asset at the end of the lease term. The expected value of the residual is $0. Foley’s incremental borrowing rate is 11%, however it knows that Sunland’s implicit interest rate is 9%. The journal entry Sunland 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 |
$687562 |
$708701 |
$714010 |
$997540 |
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Intermediate Accounting Reporting and Analysis
Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach
2nd edition
9781305727557, 1285453824, 9781337116619, 130572755X, 978-1285453828
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