On January 1, 2024, Ghosh Industries leased a high-performance conveyer to Karrier Company for a four-year period ending December 31, 2027, at which time possession of the leased asset will revert back to Ghosh. The equipment cost Ghosh $957,000 and has an expected useful life of five years. Ghosh expects the residual value at December 31, 2027, will be $301,000. Negotiations led to the lessee guaranteeing a $341,000 residual value. Equal payments under the finance/sales - type lease are $201,000 and are due on December 31 of each year with the first payment being made on December 31, 2024. Karrier is aware that Ghosh used a 4% interest rate when calculating lease payments.

On January 1, 2024, Ghosh Industries leased a high-performance conveyer to Karrier Company for a four-year period ending December 31, 2027, at which time possession of the leased asset will revert back to Ghosh. The equipment cost Ghosh $957,000 and has an expected useful life of five years. Ghosh expects the residual value at December 31, 2027, will be $301,000. Negotiations led to the lessee guaranteeing a $341,000 residual value. Equal payments under the finance/sales - type lease are $201,000 and are due on December 31 of each year with the first payment being made on December 31, 2024. Karrier is aware that Ghosh used a 4% interest rate when calculating lease payments.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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