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Robbins, Inc., leased a machine from Ready Leasing Co. The lease requires 10 annual payments of 10,000 beginning immediately. The lease specifies an interest rate
Robbins, Inc., leased a machine from Ready Leasing Co. The lease requires 10 annual payments of 10,000 beginning immediately. The lease specifies an interest rate of 12% and a purchase option of 10,000 at the end of the tenth year, even though the machine's estimated value on that date is 20,000. It is reasonably certain that Robbins will exercise the purchase option. Robbins' incremental borrowing rate is 14%. What amount should Robbins record the right-of-use asset at the beginning of the lease term? show the solution and explain.
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