Sheridan, Inc. leased equipment from Tower Company under a 4-year lease requiring equal annual payments of $394152, with the first payment due at lease inception. The lease does not transfer ownership, nor is there a bargain purchase option. The equipment has a 4-year useful life and no salvage value. If Sheridan, Inc.’s incremental borrowing rate is 10% and the rate implicit in the lease (which is known by Sheridan, Inc.) is 8%, what is the amount recorded for the leased asset at the lease inception?   PV Annuity Due PV Ordinary Annuity 8%, 4 periods 3.57710 3.31213 10%, 4 periods 3.48685 3.16987   $1409921 $1305483 $1249411 $1374349

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Sheridan, Inc. leased equipment from Tower Company under a 4-year lease requiring equal annual payments of $394152, with the first payment due at lease inception. The lease does not transfer ownership, nor is there a bargain purchase option. The equipment has a 4-year useful life and no salvage value. If Sheridan, Inc.’s incremental borrowing rate is 10% and the rate implicit in the lease (which is known by Sheridan, Inc.) is 8%, what is the amount recorded for the leased asset at the lease inception?

 

PV Annuity Due

PV Ordinary Annuity

8%, 4 periods

3.57710

3.31213

10%, 4 periods

3.48685

3.16987

 

$1409921
$1305483
$1249411
$1374349
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