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Sunland Leasing Company agrees to lease equipment to Coronado Corporation on January 1 , 2 0 2 5 . The following information relates to the
Sunland Leasing Company agrees to lease equipment to Coronado Corporation on January The following information relates
to the lease agreement.
The term of the lease is years with no renewal option, and the machinery has an estimated economic life of years.
The cost of the machinery is $ and the fair value of the asset on January is $
At the end of the lease term, the asset reverts to the lessor and has a guaranteed residual value of $ Coronado
estimates that the expected residual value at the end of the lease term will be $ Coronado amortizes all of its leased
equipment on a straightline basis.
The lease agreement requires equal annual rental payments, beginning on January
The collectibility of the lease payments is probable.
Sunland desires a rate of return on its investments. Coronado's incremental borrowing rate is and the lessor's
implicit rate is unknown.
Assume the accounting period ends on December
Compute the value of the lease liability to the lessee. Round present value factor calculations to decimal places, eg and the
final answer to decimal places eg
Present value of minimum lease payments $
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