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ahrayia [7]
2 years ago
14

On January 1, Ramirez Supply leased a car for a four-year period, at which time possession of the car will revert back to the le

ssor. Annual lease payments are $14,100 due on December 31 of each year, calculated by the lessor using a 10% discount rate. Negotiations led to Ramirez guaranteeing the lessor a $42,300 residual value at the end of the lease term although Ramirez estimates that the residual value after four years will be $40,200. What is the amount to be added to the right-of-use asset and lease payable under the residual value guarantee
Business
1 answer:
ohaa [14]2 years ago
5 0

Based on the amount that Ramirez guaranteed the lessor and the estimated residual value, the amount to be added to the right-of-use asset is $1,434.33.

<h3>What amount should be added to the right-of-use asset?</h3>

This would be the present value of the difference between the guaranteed amount and the estimated residual value.

= 42,300 - 40,200

= $2,100

Present value:

= 2,100 / (1 + 10%)⁴

= 1,434.328

= $1,434.33

In conclusion, the right-of-use asset amount to be added is $1,434.33.

Find out more on present value at brainly.com/question/20813161.

#SPJ1

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