cial Accounting & Reporting III ses Part 2, In-class activity #2 ses R Us (LRU) has been approached by New Manufacturing, asking LRU to develop several alternative easing contract for equipment New Manufacturing would like to acquire. ● The equipment has a fair value of $1,300,000 and an expected useful life of 10 years. It will cost L $1,000,000 to acquire the equipment, and LRU expects to also incur $5,000 in initial direct costs. expects to recover the initial direct costs as part of the payments under the lease, and will therefc include that amount in the calculation to determine the lease payment. LRU's required rate of return is 7% for leases where the probable payments equal or exceed the e fair value of the leased asset, and a rate of return of 8% for leases that include unguaranteed resi value. All payments are annual payments that will be due on the first day of the year, beginning on the commencement date.

cial Accounting & Reporting III ses Part 2, In-class activity #2 ses R Us (LRU) has been approached by New Manufacturing, asking LRU to develop several alternative easing contract for equipment New Manufacturing would like to acquire. ● The equipment has a fair value of $1,300,000 and an expected useful life of 10 years. It will cost L $1,000,000 to acquire the equipment, and LRU expects to also incur $5,000 in initial direct costs. expects to recover the initial direct costs as part of the payments under the lease, and will therefc include that amount in the calculation to determine the lease payment. LRU's required rate of return is 7% for leases where the probable payments equal or exceed the e fair value of the leased asset, and a rate of return of 8% for leases that include unguaranteed resi value. All payments are annual payments that will be due on the first day of the year, beginning on the commencement date.

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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