Question
On January 2, 2021, Wildhorse Leasing Company leases equipment to Foley Co. with 5 equal annual payments of $157000 each, payable beginning January 2, 2021.
On January 2, 2021, Wildhorse Leasing Company leases equipment to Foley Co. with 5 equal annual payments of $157000 each, payable beginning January 2, 2021. Foley Co. agrees to guarantee the $97000 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 Wildhorses implicit interest rate is 9%. The journal entry Wildhorse 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 |
$728679
$1021928
$701649
$723201
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started