Solution-At what value will the right-of-use asset be

At what value will the right-of-use asset be recorded

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Question - Elliott Brothers enters into a lease agreement with Central Leasing for a piece of equipment. The terms of the 5-year lease state that payments of $ 20, 500 will be made annually on January 1, commencing with the date that the lease begins. The lease contains a provision that Elliott Brothers may purchase the equipment at the end of the lease period for $ 18, 000, which is well below the expected fair value at the end of the lease. As such, it is expected that Elliott Brothers will exercise this option. The implicit rate in the lease is 4%.
If this lease is treated as a finance lease for Elliott Brothers, at what value will the right-of-use asset be recorded?

Reference no: EM132865152

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At what value will the right-of-use asset be recorded

Reference no: EM132865152

Reference no: EM132865152

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