Ivanhoe's incremental borrowing rate is 6%. If the value of the lease liability is $40,186, what amount will Ivanhoe record as the value of the right-of-use asset on January 1, 2025, at commencement of the operating lease? Value of the right-of-use asset $ 42,186

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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Ivanhoe Corporation entered into an operating lease to lease equipment from Oriole, Inc. on January 1, 2025. The lease calls for
annual lease payments of $9,000, beginning on December 31, for each of the 5 years of the lease. In addition, Oriole, Inc. will pay
Ivanhoe Corporation $2,000 as a cash incentive for entering the lease by December 31. In relation to the lease agreement, Ivanhoe
incurred the following costs.
Commissions for selling agents
Internal engineering costs
Legal fees resulting from the execution of the lease
$700
Value of the right-of-use asset $
500
2,800
Ivanhoe's incremental borrowing rate is 6%. If the value of the lease liability is $40,186, what amount will Ivanhoe record as the value
of the right-of-use asset on January 1, 2025, at commencement of the operating lease?
42,186
Transcribed Image Text:X Your answer is incorrect. Ivanhoe Corporation entered into an operating lease to lease equipment from Oriole, Inc. on January 1, 2025. The lease calls for annual lease payments of $9,000, beginning on December 31, for each of the 5 years of the lease. In addition, Oriole, Inc. will pay Ivanhoe Corporation $2,000 as a cash incentive for entering the lease by December 31. In relation to the lease agreement, Ivanhoe incurred the following costs. Commissions for selling agents Internal engineering costs Legal fees resulting from the execution of the lease $700 Value of the right-of-use asset $ 500 2,800 Ivanhoe's incremental borrowing rate is 6%. If the value of the lease liability is $40,186, what amount will Ivanhoe record as the value of the right-of-use asset on January 1, 2025, at commencement of the operating lease? 42,186
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