11/29/23, 10:08 AM
Question 36 of 100 - Quiz Two
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On December 31, 2023, Sandhill Inc. leased machinery with a fair value of $421000 from
Northern Rentals. The agreement is a six-year non-cancellable lease requiring annual payments of
$84000 beginning December 31, 2023. The lease is appropriately accounted for by Sandhill as a
±nance lease. Sandhill’s incremental borrowing rate is 11%; however, it also knows that the
interest rate implicit in the lease payments is 10%. Eastern adheres to IFRS.
On its December 31, 2023 statement of ±nancial position, Sandhill should report a lease liability
of
(
Round present value factor calculations to 4 decimal places, e.g. 125.1241)
Click here to view the factor table.
$318427.
$337000.
$402427.
$394458.
($84000 × 4.7908) – $84000 =
$318427
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