Compute the amount of the lease receivable

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Question - The following facts pertain to a noncancelable lease agreement between Blue Leasing Company and Kingbird Company, a lessee.

Inception date: May 1, 2017 Annual lease payment due at the beginning of each year, beginning with May 1, 2017 $22,965.87 Bargain-purchase option price at end of lease term $3,600 Lease term 5 years

Economic life of leased equipment 10 years Lessor's cost $69,000 Fair value of asset at May 1, 2017 $98,000 Lessor's implicit rate 10% Lessee's incremental borrowing rate10%

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.

Compute the amount of the lease receivable at the inception of the lease.

Reference no: EM132539059

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