On December 31, 2019, Oriole Company leased machinery from Terminator Corporation for an agreed upon lease term of 3 years. Oriole agreed to make annual lease payments of $18,500, beginning on December 31, 2019. The expected residual value of the machinery at the end of the lease term is $9,250. Oriole guarantees a residual value of $9,250 at the end of the lease term, which equals the expected residual value of the machinery. What amount will Oriole record as its lease liability if the expected residual value at the end of the lease term is $6,250 and Oriole guarantees a residual of $9,250. Its incremental borrowing rate is 6% and the implicit rate of the lease is unknown? Lease liability = $________ please explain how
On December 31, 2019, Oriole Company leased machinery from Terminator Corporation for an agreed upon lease term of 3 years. Oriole agreed to make annual lease payments of $18,500, beginning on December 31, 2019. The expected residual value of the machinery at the end of the lease term is $9,250. Oriole guarantees a residual value of $9,250 at the end of the lease term, which equals the expected residual value of the machinery. What amount will Oriole record as its lease liability if the expected residual value at the end of the lease term is $6,250 and Oriole guarantees a residual of $9,250. Its incremental borrowing rate is 6% and the implicit rate of the lease is unknown? Lease liability = $________ please explain how
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter20: Accounting For Leases
Section: Chapter Questions
Problem 10MC: On August 1, 2019, Kern Company leased a machine to Day Company for a 6-year period requiring...
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On December 31, 2019, Oriole Company leased machinery from Terminator Corporation for an agreed upon lease term of 3 years. Oriole agreed to make annual lease payments of $18,500, beginning on December 31, 2019. The expected residual value of the machinery at the end of the lease term is $9,250. Oriole guarantees a residual value of $9,250 at the end of the lease term, which equals the expected residual value of the machinery. What amount will Oriole record as its lease liability if the expected residual value at the end of the lease term is $6,250 and Oriole guarantees a residual of $9,250. Its incremental borrowing rate is 6% and the implicit rate of the lease is unknown?
Lease liability = $________
please explain how
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