Exercise 21-9 (Part Level Submission) The following facts pertain to a noncancel

Question

Exercise 21-9 (Part Level Submission) The following facts pertain to a noncancelable lease agreement between Sweet Leasing Company and Pharoah Company, a lessee. Inception date Annual lease payment due at the beginning of May 1, 2017 each year, beginning with May 1, 2017 Bargain-purchase option price at end of lease term Lease term Economic life of leased equipment Lessor's cost Fair value of asset at May 1, 201 Lessor's implicit rate Lessee's incremental borrowing rate $23,400.83 $3,900 5 years 10 years $58,000 $100,000 10% 10% 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 Click here to view factor tables 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.) Lease receivable at inception Attempts: O of 3 used of this question must be completed in order. This part will be available when you complete the part above The parts of this question must be completed in order. 7 his part wll be available when you complete the part above.

Explanation / Answer

Calculate the amount of lease receivables at the date of the inception as shown below:

Year PVF (a) Annual Lease Rental (b) Present Value (a)*(b) 1 1 23400.83 23400.83 2 0.909091 23400.83 21273.48 3 0.826446 23400.83 19339.53 4 0.751315 23400.83 17581.39 5 0.683013 23400.83 15983.08 Lease Receivable at Inception 97578.31

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