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Calculate the amount of the annual rental payment. (Round answer to 0 decimal places, e.g. 5,275.) Annual rental payment $

Calculate the amount of the annual rental payment. (Round answer to 0 decimal places, e.g. 5,275.) Annual rental payment $

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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1. 2. 3. 4. The term of the non-cancelable lease is 4 years. At the end of the lease term, Daylight has the option to purchase the equipment for $1,900, while the expected residual value at the end of the lease is $15,000. The equipment has an economic life of 5 years. Daylight depreciates all of its equipment on a straight-line basis. Blossom set the annual rental to ensure a 4% rate of return. Daylight's incremental borrowing rate is 5%, and the implicit rate of the lessor is unknown. 6. Collectibility of lease payments by the lessor is probable. 5. Equal rental payments are due on January 1 of each year, beginning in 2020. The fair value of the equipment on January 1, 2020, is $220,000, and its cost is $189,000. Both the lessor and the lessee's accounting periods end on December 31. Show Transcribed Text G Annual rental payment $ C Calculate the amount of the annual rental payment. (Round answer to 0 decimal places, e.g. 5,275.)
Transcribed Image Text:1. 2. 3. 4. The term of the non-cancelable lease is 4 years. At the end of the lease term, Daylight has the option to purchase the equipment for $1,900, while the expected residual value at the end of the lease is $15,000. The equipment has an economic life of 5 years. Daylight depreciates all of its equipment on a straight-line basis. Blossom set the annual rental to ensure a 4% rate of return. Daylight's incremental borrowing rate is 5%, and the implicit rate of the lessor is unknown. 6. Collectibility of lease payments by the lessor is probable. 5. Equal rental payments are due on January 1 of each year, beginning in 2020. The fair value of the equipment on January 1, 2020, is $220,000, and its cost is $189,000. Both the lessor and the lessee's accounting periods end on December 31. Show Transcribed Text G Annual rental payment $ C Calculate the amount of the annual rental payment. (Round answer to 0 decimal places, e.g. 5,275.)
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