Northern Equipment leases cooling towers to Warmup Corporation. The equipment is not specialized and is...
70.2K
Verified Solution
Link Copied!
Question
Accounting
Northern Equipment leases cooling towers to Warmup Corporation. The equipment is not specialized and is delivered on January 1, 2019. The fair value of the equipment is $180,000. The cost of the equipment to Northern is $170.000 and the expected life of the testing equipment is 8 years. At the end of the useful life, it is expected that the equipment will have a residual value of $20,000, although the lessee guarantees only $15.000 Northern Incurs initial direct costs of $20,000, which they elect to expense. The lease term for the equipment is 8 years, with the first payment due upon delivery, and seven subsequent annual payments beginning on December 31, 2019 and ending on December 31, 2025. Northern's implicitrate is 8% and they expect that collection of the $30,000 payments is probable. The lease is properly classified as a sales-type loase. What amount will be recorded for cost of goods sold? (Round any present value calculations to the nearest dollar, and round any percentages two decimal places XOXOX .) O A. $167.642 OB. 5180.000 OC. $172 358 OD. $183,851
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
