Oriole Services Inc. accounts for the lease of a truck. The lease includes a residual value guarantee at the end of the lease term of $17,500. Oriole estimates that the likelihood that the residual value will be $17,500 has a 50% certainty. Oriole feels that there is a 40% chance that the residual value will be $11,300 and a 10% chance that it will be $9,600. Calculate the probability-weighted value of the residual guarantee that needs to be included in the measurement of the lease payments liability recorded by Oriole when the lease is signed. Probability-weighted expected value $
Oriole Services Inc. accounts for the lease of a truck. The lease includes a residual value guarantee at the end of the lease term of $17,500. Oriole estimates that the likelihood that the residual value will be $17,500 has a 50% certainty. Oriole feels that there is a 40% chance that the residual value will be $11,300 and a 10% chance that it will be $9,600. Calculate the probability-weighted value of the residual guarantee that needs to be included in the measurement of the lease payments liability recorded by Oriole when the lease is signed. Probability-weighted expected value $
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter20: Accounting For Leases
Section: Chapter Questions
Problem 7RE: Use the information in RE20-6. However, assume that there is no bargain purchase option and that...
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![Oriole Services Inc. accounts for the lease of a truck. The lease includes a residual value guarantee at the end of the lease term of
$17,500. Oriole estimates that the likelihood that the residual value will be $17,500 has a 50% certainty. Oriole feels that there is a
40% chance that the residual value will be $11,300 and a 10% chance that it will be $9,600.
Calculate the probability-weighted value of the residual guarantee that needs to be included in the measurement of the lease
payments liability recorded by Oriole when the lease is signed.
Probability-weighted expected value $](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F422a3402-f0e9-4c20-b89e-5230245172a8%2F66af1ea7-efc5-406d-82d9-e8002e73f65b%2Ft2el21n_processed.png&w=3840&q=75)
Transcribed Image Text:Oriole Services Inc. accounts for the lease of a truck. The lease includes a residual value guarantee at the end of the lease term of
$17,500. Oriole estimates that the likelihood that the residual value will be $17,500 has a 50% certainty. Oriole feels that there is a
40% chance that the residual value will be $11,300 and a 10% chance that it will be $9,600.
Calculate the probability-weighted value of the residual guarantee that needs to be included in the measurement of the lease
payments liability recorded by Oriole when the lease is signed.
Probability-weighted expected value $
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