Sheridan Cosmetics, Inc. has entered into a leasing agreement to rent equipment from Sheffield Leasing...
90.2K
Verified Solution
Link Copied!
Question
Accounting
Sheridan Cosmetics, Inc. has entered into a leasing agreement to rent equipment from Sheffield Leasing Services. There is no transfer of title, there is not a bargain purchase option, and the economic life test is not met. Based on the following information, what would be used in the 90% test for the present value of the lease payments for the lessee?
Annual payments (1st day of the period) $51700
Lease termination 5 years
Guaranteed Residual Value $12600
Incremental Borrowing Rate (lessor implicit rate is not known) 8%
PV Annuity Due
PV ordinary annuity
PV Single Sum
6%, 5 periods
4.46511
4.21236
0.74726
8%, 5 periods
4.31213
3.99271
0.68058
10%, 5 periods
4.16986
3.79079
0.62092
$231512
$271100
$258500
$222937
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: Zin AI - Your personal assistant for all your inquiries!
