On December 31, 2019, Sheridan Company leased machinery from Terminator Corporation for an agreed upon lease term of 3 years. Sheridan agreed to make annual lease payments of $16,000. beginning on December 31, 2019. The expected residual value of the machinery at the end of the lease term is $8,000. Sheridan guarantees a residual value of $8,000 at the end of the lease term, which equals the expected residual value of the machinery. What amount will Sheridan record as its lease liability if the expected residual value at the end of the lease term is $5,000 and Sheridan guarantees a residual of $8,000. Its incremental borrowing rate is 4% 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.) Click here to view factor tables. Lease liability $ 53290
On December 31, 2019, Sheridan Company leased machinery from Terminator Corporation for an agreed upon lease term of 3 years. Sheridan agreed to make annual lease payments of $16,000. beginning on December 31, 2019. The expected residual value of the machinery at the end of the lease term is $8,000. Sheridan guarantees a residual value of $8,000 at the end of the lease term, which equals the expected residual value of the machinery. What amount will Sheridan record as its lease liability if the expected residual value at the end of the lease term is $5,000 and Sheridan guarantees a residual of $8,000. Its incremental borrowing rate is 4% 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.) Click here to view factor tables. Lease liability $ 53290
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On December 31, 2019, Sheridan Company leased machinery from Terminator Corporation for an
agreed upon lease term of 3 years. Sheridan agreed to make annual lease payments of $16,000.
beginning on December 31, 2019. The expected residual value of the machinery at the end of the lease
term is $8,000. Sheridan guarantees a residual value of $8,000 at the end of the lease term, which
equals the expected residual value of the machinery.
What amount will Sheridan record as its lease liability if the expected residual value at the end of the
lease term is $5,000 and Sheridan guarantees a residual of $8,000. Its incremental borrowing rate is 4%
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.)
Click here to view factor tables.
Lease liability
53290
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