On December 31, 2019, Oriole Company leased machinery from Terminator Corporation for an agreed upon lease term of 3 years. Oriole agreed to make annual lease payments of $21,000, beginning on December 31, 2019. The expected residual value of the machinery at the end of the lease term is $10,500, though Oriole does not guarantee any residual value to Terminator. What amount will Oriole record as its lease liability on December 31, 2019, if its incremental borrowing rate is 7% and the implicit rate of the lease is unknown? (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answer to 0 decimal places, e.g. 5,275.) Lease liability ________________ $
On December 31, 2019, Oriole Company leased machinery from Terminator Corporation for an agreed upon lease term of 3 years. Oriole agreed to make annual lease payments of $21,000, beginning on December 31, 2019. The expected residual value of the machinery at the end of the lease term is $10,500, though Oriole does not guarantee any residual value to Terminator.
What amount will Oriole record as its lease liability on December 31, 2019, if its incremental borrowing rate is 7% and the implicit rate of the lease is unknown? (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answer to 0 decimal places, e.g. 5,275.)
| Lease liability | ________________ | $
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