lessor company signs a sales-type lease agreement on December 31, 2020 to lease equipment to the lessee company. The term of the non-cancelable lease is 10 years, and yearly rental payment of $119,000 is required at the end of each year, beginning on December 31, 2020. The equipment has a cost of $181,000 to the lessor company. The agreement specifies that the unguaranteed residual value is $33,000. The lessor expects to earn a return of 8% on its investment. What is the amount of cost of goods sold the lessor will record on December 31, 2020?
The lessor company signs a sales-type lease agreement on December 31, 2020 to lease equipment to the lessee company. The term of the non-cancelable lease is 10 years, and yearly rental payment of $119,000 is required at the end of each year, beginning on December 31, 2020. The equipment has a cost of $181,000 to the lessor company. The agreement specifies that the unguaranteed residual value is $33,000. The lessor expects to earn a return of 8% on its investment. What is the amount of cost of goods sold the lessor will record on December 31, 2020? (You must choose from the following present/future values. Please do not use the tables in the textbook, tables posted on the Blackboard, or values from a financial calculator.)
|
|
Future Value Single Sum |
Present Value Single Sum |
Future Value Ordinary Annuity |
Present Value Ordinary Annuity |
Present Value Annuity Due |
|
8%, 10 periods |
2.16 |
0.46 |
14.49 |
6.71 |
7.25 |
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