On December 31, 2024, Pharoah Company leased machinery from Sheridan Corporation for an agreed-upon lease term of 3 years. Pharoah agreed to make annual lease payments of $16,000, beginning on December 31, 2024. The expected residual value of the machinery at the end of the lease term is $8,000. (a) Your answer is correct. What amount will Pharoah record as its lease liability on December 31, 2024, if 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 O decimal places, e.g. 5,275.) Click here to view factor tables. Lease liability $ (b) eTextbook and Media * Your answer is incorrect. Lease liability $ Pharoah guarantees a residual value of $8,000 at the end of the lease term. What if the expected residual value at the end of the lease term is $4,000 and Pharoah guarantees a residual of $8,000? (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answer to O decimal places, e.g. 5,275.) Click here to view factor tables. eTextbook and Media eTextbook 46177 Save for Later Attempts: 1 of 3 used 47933 Assistance Used Attempts: 2 of 3 used Submit Answer
On December 31, 2024, Pharoah Company leased machinery from Sheridan Corporation for an agreed-upon lease term of 3 years. Pharoah agreed to make annual lease payments of $16,000, beginning on December 31, 2024. The expected residual value of the machinery at the end of the lease term is $8,000. (a) Your answer is correct. What amount will Pharoah record as its lease liability on December 31, 2024, if 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 O decimal places, e.g. 5,275.) Click here to view factor tables. Lease liability $ (b) eTextbook and Media * Your answer is incorrect. Lease liability $ Pharoah guarantees a residual value of $8,000 at the end of the lease term. What if the expected residual value at the end of the lease term is $4,000 and Pharoah guarantees a residual of $8,000? (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answer to O decimal places, e.g. 5,275.) Click here to view factor tables. eTextbook and Media eTextbook 46177 Save for Later Attempts: 1 of 3 used 47933 Assistance Used Attempts: 2 of 3 used Submit Answer
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On December 31, 2024, Pharoah Company leased machinery from Sheridan Corporation for an agreed-upon lease term of 3 years.
Pharoah agreed to make annual lease payments of $16,000, beginning on December 31, 2024. The expected residual value of the
machinery at the end of the lease term is $8,000.
(a)
Your answer is correct.
What amount will Pharoah record as its lease liability on December 31, 2024, if 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 O decimal places, e.g. 5,275.)
Click here to view factor tables.
(b)
Lease liability $
eTextbook and Media
* Your answer is incorrect.
Lease liability $
Pharoah guarantees a residual value of $8,000 at the end of the lease term. What if the expected residual value at the end of the
lease term is $4,000 and Pharoah guarantees a residual of $8,000? (For calculation purposes, use 5 decimal places as displayed in the
factor table provided and round final answer to O decimal places, e.g. 5,275.)
Click here to view factor tables.
eTextbook and Media
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46177
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