On January 2, 2025, Gold Star Leasing Company leases equipment to Brick Co. with 5 equal annual payments of $160000 each, payable beginning January 2, 2025. There is expected residual of $25000 but it is not guaranteed. Brick's incremental borrowing rate is 10%, however, it knows that Gold Star's implicit interest rate is 8%. The lease is appropriately classified as a finance/sales-type lease. What will Gold Star record as the sales price of the asset? 8%, 5 periods 10%, 5 periods O $689941 O $682691 O $706892 O $667179 PV Annuity Due PV Ordinary Annuity 4.31213 4.16987 3.99271 3.79079 PV Single Sum 0.68058 0.62092

On January 2, 2025, Gold Star Leasing Company leases equipment to Brick Co. with 5 equal annual payments of $160000 each, payable beginning January 2, 2025. There is expected residual of $25000 but it is not guaranteed. Brick's incremental borrowing rate is 10%, however, it knows that Gold Star's implicit interest rate is 8%. The lease is appropriately classified as a finance/sales-type lease. What will Gold Star record as the sales price of the asset? 8%, 5 periods 10%, 5 periods O $689941 O $682691 O $706892 O $667179 PV Annuity Due PV Ordinary Annuity 4.31213 4.16987 3.99271 3.79079 PV Single Sum 0.68058 0.62092

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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