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Tamarisk Fashion Company enters into a lease arrangement with Highpoint Leasing for 5 years. Tamarisk agrees to pay 7% of its net sales as a variable lease payment. Tamarisk does not pay any fixed payments. Tamarisk is a highly successful company that has achieved over $1,400,000 in net sales over the last 7 years. Both Tamarisk and Highpoint forecast that net sales will be a much greater amount than $1,400,000 in subsequent years. As a result, it is highly certain that Tamarisk will make payments of at least $98,000 ($1,400,000 × 7%) each year. What is the lease payment amount Tamarisk should use to record its right-of-use asset? Lease payment   $

Tamarisk Fashion Company enters into a lease arrangement with Highpoint Leasing for 5 years. Tamarisk agrees to pay 7% of its net sales as a variable lease payment. Tamarisk does not pay any fixed payments. Tamarisk is a highly successful company that has achieved over $1,400,000 in net sales over the last 7 years. Both Tamarisk and Highpoint forecast that net sales will be a much greater amount than $1,400,000 in subsequent years. As a result, it is highly certain that Tamarisk will make payments of at least $98,000 ($1,400,000 × 7%) each year. What is the lease payment amount Tamarisk should use to record its right-of-use asset? Lease payment   $

FINANCIAL ACCOUNTING
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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Tamarisk Fashion Company enters into a lease arrangement with Highpoint Leasing for 5 years. Tamarisk agrees to pay 7% of its net sales as a variable lease payment. Tamarisk does not pay any fixed payments. Tamarisk is a highly successful company that has achieved over $1,400,000 in net sales over the last 7 years. Both Tamarisk and Highpoint forecast that net sales will be a much greater amount than $1,400,000 in subsequent years. As a result, it is highly certain that Tamarisk will make payments of at least $98,000 ($1,400,000 × 7%) each year.

What is the lease payment amount Tamarisk should use to record its right-of-use asset?

Lease payment   $
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