Sage Hill Fashion Company enters into a lease arrangement with Highpoint Leasing for 5 years. Sage Hill agrees to pay 4% of its net sales as a variable lease payment. Sage Hill does not pay any fixed payments. Sage Hill is a highly successful company that has achieved over $1,350,000 in net sales over the last 7 years. Both Sage Hill and Highpoint forecast that net sales will be a much greater amount than $1,350,000 in subsequent years. As a result, it is highly certain that Sage Hill will make payments of at least $54,000 ($1,350,000 × 4%) each year. What is the lease payment amount Sage Hill should use to record its right-of-use asset? Lease payment $enter the lease payment in dollars
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Sage Hill Fashion Company enters into a lease arrangement with Highpoint Leasing for 5 years. Sage Hill agrees to pay 4% of its net sales as a variable lease payment. Sage Hill does not pay any fixed payments. Sage Hill is a highly successful company that has achieved over $1,350,000 in net sales over the last 7 years. Both Sage Hill and Highpoint
What is the lease payment amount Sage Hill should use to record its right-of-use asset?
| Lease payment | $enter the lease payment in dollars |
Right-of-use assets will be recognized at the present value of minimum lease payment obligations.
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