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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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