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At January 1, 2024, Sunny Company leased restaurant equipment from Central Corporation under a five-year lease agreement in a finance lease. The lease agreement specifies annual payments of $60,000 beginning January 1, 2024, the beginning of the lease, and at each December 31 thereafter through 2027. The equipment was acquired recently by Central and was expected to have a useful life of six years with no salvage value at the end of its life. Central seeks a 3% return on its lease investments. The amount of lease liability reported on December 31, 2024 balance sheet by Sunny would be: Period 5 6 O $171,517 O $216,405 O $169,717 O $202,949 Present Value of Ordinary Annuity of $1 3% 4% 4.57971 4.45182 6% 8% 4.21236 3.99271 3% Present Value of Annuity Due of $1 4.71710 5.41719 5.24214 4.91732 4.62288 5.57971 4% 4.62990 6% 4.46511 5.45182 5.21236 8% 4.31213 4.99271

At January 1, 2024, Sunny Company leased restaurant equipment from Central Corporation under a five-year lease agreement in a finance lease. The lease agreement specifies annual payments of $60,000 beginning January 1, 2024, the beginning of the lease, and at each December 31 thereafter through 2027. The equipment was acquired recently by Central and was expected to have a useful life of six years with no salvage value at the end of its life. Central seeks a 3% return on its lease investments. The amount of lease liability reported on December 31, 2024 balance sheet by Sunny would be: Period 5 6 O $171,517 O $216,405 O $169,717 O $202,949 Present Value of Ordinary Annuity of $1 3% 4% 4.57971 4.45182 6% 8% 4.21236 3.99271 3% Present Value of Annuity Due of $1 4.71710 5.41719 5.24214 4.91732 4.62288 5.57971 4% 4.62990 6% 4.46511 5.45182 5.21236 8% 4.31213 4.99271

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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At January 1, 2024, Sunny Company leased restaurant equipment from Central Corporation under a five-year lease agreement in a finance lease. The lease agreement specifies annual payments of $60,000 beginning January 1, 2024, the beginning of the lease, and at each December 31 thereafter through 2027. The equipment was acquired recently by Central and was expected to have a useful life of six years with no salvage value at the end of its life. Central seeks a 3% return on its lease investments. The amount of lease liability reported on December 31, 2024 balance sheet by Sunny would be: Period 5 6 O $171,517 O $216,405 O $169,717 O $202,949 Present Value of Ordinary Annuity of $1 3% 4% 4.57971 4.45182 6% 8% 4.21236 3.99271 3% Present Value of Annuity Due of $1 4.71710 5.41719 5.24214 4.91732 4.62288 5.57971 4% 4.62990 6% 4.46511 5.45182 5.21236 8% 4.31213 4.99271
Transcribed Image Text:At January 1, 2024, Sunny Company leased restaurant equipment from Central Corporation under a five-year lease agreement in a finance lease. The lease agreement specifies annual payments of $60,000 beginning January 1, 2024, the beginning of the lease, and at each December 31 thereafter through 2027. The equipment was acquired recently by Central and was expected to have a useful life of six years with no salvage value at the end of its life. Central seeks a 3% return on its lease investments. The amount of lease liability reported on December 31, 2024 balance sheet by Sunny would be: Period 5 6 O $171,517 O $216,405 O $169,717 O $202,949 Present Value of Ordinary Annuity of $1 3% 4% 4.57971 4.45182 6% 8% 4.21236 3.99271 3% Present Value of Annuity Due of $1 4.71710 5.41719 5.24214 4.91732 4.62288 5.57971 4% 4.62990 6% 4.46511 5.45182 5.21236 8% 4.31213 4.99271
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