Ayayai Equipment Leasing Company leased equipment to Wildhorse Healthcare System on January 1, 2025, for a four-year period. Equal annual payments under the lease are $450000 and are due on January 1 of each year. The first payment was made on January 1, 2025. The implicit rate of interest contemplated by Ayayai Equipment Leasing and known to Wildhorse Healthcare is 8%. Wildhorse's incremental borrowing rate is 11%. The cost of the equipment on Ayayai Equipment Leasing accounting records was $870000. Assuming that the lease is appropriately recorded as an operating lease, at what amount is the lease recorded on Wildhorse Healthcare System's books on January 1, 2025? PV Annuity Due PV Ordinary Annuity PV Single Sum 8%, 4 periods 3.57710 3.31213 0.73503 11%, 4 periods 3.44371 3.10245 0.65873 $1800000 ○ $829091 ○ $1609695 no entry to record an operating lease.
Ayayai Equipment Leasing Company leased equipment to Wildhorse Healthcare System on January 1, 2025, for a four-year period. Equal annual payments under the lease are $450000 and are due on January 1 of each year. The first payment was made on January 1, 2025. The implicit rate of interest contemplated by Ayayai Equipment Leasing and known to Wildhorse Healthcare is 8%. Wildhorse's incremental borrowing rate is 11%. The cost of the equipment on Ayayai Equipment Leasing accounting records was $870000. Assuming that the lease is appropriately recorded as an operating lease, at what amount is the lease recorded on Wildhorse Healthcare System's books on January 1, 2025? PV Annuity Due PV Ordinary Annuity PV Single Sum 8%, 4 periods 3.57710 3.31213 0.73503 11%, 4 periods 3.44371 3.10245 0.65873 $1800000 ○ $829091 ○ $1609695 no entry to record an operating lease.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Ayayai Equipment Leasing Company leased equipment to Wildhorse Healthcare System on January 1, 2025, for a four-year period.
Equal annual payments under the lease are $450000 and are due on January 1 of each year. The first payment was made on January 1,
2025. The implicit rate of interest contemplated by Ayayai Equipment Leasing and known to Wildhorse Healthcare is 8%. Wildhorse's
incremental borrowing rate is 11%. The cost of the equipment on Ayayai Equipment Leasing accounting records was $870000.
Assuming that the lease is appropriately recorded as an operating lease, at what amount is the lease recorded on Wildhorse
Healthcare System's books on January 1, 2025?
PV Annuity Due PV Ordinary Annuity PV Single Sum
8%, 4 periods
3.57710
3.31213
0.73503
11%, 4 periods
3.44371
3.10245
0.65873
$1800000
○ $829091
○ $1609695
no entry to record an operating lease.
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