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Shamrock Company is negotiating to lease a piece of equipment to Pharoah, Inc. Pharoah requests that the lease be for 9 years. The equipment has
Shamrock Company is negotiating to lease a piece of equipment to Pharoah, Inc. Pharoah requests that the lease be for 9 years. The equipment has a useful life of 10 years. Shamrock wants a guarantee that the residual value of the equipment at the end of the lease is at least $7,000. Pharoah agrees to guarantee a residual value of this amount though it expects the residual value of the equipment to be only $2,000 at the end of the lease term. If the fair value of the equipment at lease commencement is $65,000, what would be the amount of the annual rental payments Shamrock demands of Pharoah, assuming each payment will be made at the beginning of each year and Shamrock wishes to earn a rate of return on the lease of 11\%? (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answer to 0 decimal places, e.g. 5,275.) Click here to view factor tables. Amount of equal annual lease payments $ Ivanhoe Corporation manufactures drones. On December 31, 2024, it leased to Cullumber Company a drone that had cost $119,700 to manufacture. The lease agreement covers the 5 -year useful life of the drone and requires 5 equal annual rentals of $42,300 payable each December 31 , beginning December 31,2024 . An interest rate of 8% is implicit in the lease agreement. Collectibility of the rentals is probable. Prepare Ivanhoe's December 31, 2024, journal entries. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places e.g. 5,275.) Click here to view factor tables
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