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Pharoah Services Inc. accounts for the lease of a truck. The lease includes a residual value guarantee at the end of the lease term of
Pharoah Services Inc. accounts for the lease of a truck. The lease includes a residual value guarantee at the end of the lease term of $ 17,400. Pharoah estimates that the likelihood that the residual value will be $ 17,400 has a 50% certainty. Pharoah feels that there is a 25% chance that the residual value will be $ 12,300 and a 25% chance that it will be $ 10,000. Calculate the probability-weighted value of the residual guarantee that needs to be included in the measurement of the lease payments liability recorded by Pharoah when the lease is signed. Probability-weighted expected value
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