On January 2, 20X1, Gold Sor Lesting Company leases equipment to Brick Co. with 5 equal annual payments of $40,000, payable beginning December 31, 20X1. Brick Co. agrees to guarantee the $25,000 residual value of the asset at the end of the lease term Brick's incremental borrowing rate is 10% and Brick does not know that Gold Star's implicit interest rate is 8% Assume this is a financing type lease PV. Annuity De PV Ordinary Anity 8%, 5 periods 10%, 5periods What is the balance of the lease receivable on January 1, 20X27 431213 4.16986 3.99271 3.79079 PV Single Sum 0.68058 0.62092

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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On January 2, 20X1, Gold Star Leasing Company leases equipment to Brick Co. with 5 equal annual payments of $40,000, payable beginning December 31, 20X1. Brick Co. agrees to
guarantee the $25,000 residual value of the asset at the end of the lease term. Brick's incremental borrowing rate is 10% and Brick does not know that Gold Star's implicit interest rate is
8% Assume this is a financing type lease
PV Antuity Duc
431213
4.16986
PV Ordinary Annuity
8%, 5 periods
10%, 5periods
What is the balance of the lease receivable on January 1, 20X27
3.99271
3.79079
PV Single Sum
0.68058
0.62092
Transcribed Image Text:On January 2, 20X1, Gold Star Leasing Company leases equipment to Brick Co. with 5 equal annual payments of $40,000, payable beginning December 31, 20X1. Brick Co. agrees to guarantee the $25,000 residual value of the asset at the end of the lease term. Brick's incremental borrowing rate is 10% and Brick does not know that Gold Star's implicit interest rate is 8% Assume this is a financing type lease PV Antuity Duc 431213 4.16986 PV Ordinary Annuity 8%, 5 periods 10%, 5periods What is the balance of the lease receivable on January 1, 20X27 3.99271 3.79079 PV Single Sum 0.68058 0.62092
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