On January 2, 2018, Hanson Leasing Company leases equipment to Foley Co. with 5 equal annual payments of $240,000 each, payable beginning January 2, 2018. Foley Co. agrees to guarantee the $150,000 residual value of the asset at the end of the lease term. The expected value of the residual is $0. Foley’s incremental borrowing rate is 10%, however it knows that Hanson’s implicit interest rate is 8%. The lessee classifies the lease as an operating lease because none of the finance lease tests are met. The journal entry lessee makes at January 2, 2018 includes a debit to right-of-use asset for? PV Annuity Due PV Ordinary Annuity PV Single Sum 8%, 5 periods 4.31213 3.99271 .68508 10%, 5 periods 4.16986 3.79079 .62092
Mortgages
A mortgage is a formal agreement in which a bank or other financial institution lends cash at interest in return for assuming the title to the debtor's property, on the condition that the obligation is paid in full.
Mortgage
The term "mortgage" is a type of loan that a borrower takes to maintain his house or any form of assets and he agrees to return the amount in a particular period of time to the lender usually in a series of regular equally monthly, quarterly, or half-yearly payments.
- On January 2, 2018, Hanson Leasing Company leases equipment to Foley Co. with 5 equal annual payments of $240,000 each, payable beginning January 2, 2018. Foley Co. agrees to guarantee the $150,000 residual value of the asset at the end of the lease term. The expected value of the residual is $0. Foley’s incremental borrowing rate is 10%, however it knows that Hanson’s implicit interest rate is 8%. The lessee classifies the lease as an operating lease because none of the finance lease tests are met. The
journal entry lessee makes at January 2, 2018 includes a debit to right-of-use asset for?
PV Annuity Due PV Ordinary Annuity PV Single Sum
8%, 5 periods 4.31213 3.99271 .68508
10%, 5 periods 4.16986 3.79079 .62092
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