Exercise : Reposting - Incorrect answer provided
The following facts pertain to a noncancelable lease agreement between Wildhorse Leasing Company and Sheffield Company, a lessee.
| Inception date |
5/1/17 |
| Annual lease payment due at beginning of each year, starting 5/1/17 |
$18,727.72 |
| Bargain-purchase option price at end of lease term |
$4,000 |
| Lease term |
5 years |
| Economic life of leased equipment |
10 years |
| Lessor's cost |
$62,000 |
| Fair value of asset at 5/1/17 |
$82,000 |
| Lessor's implicit rate |
9% |
| Lessee's incremental borrowing rate |
9% |
The collectibility of the lease payments is reasonably predictable, and there are no important uncertainties surrounding the costs yet to be incurred by the lessor. The lessee assumes responsibility for all executory costs.
Part : Compute the amount of the lease receivable at the inception of the lease.
(Round present value factor calculations to 5 decimal places, e.g. 1.25124 and Round answers to 2 decimal places, e.g. 16.25.)