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What amount should Gordon Ltd use to record the right to use

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Question - Gordon Ltd leases a mining helicopter from Freeman Ltd. The terms of the lease are as follows: The lease is to commence on 1 July 2020. The lease is to last for 3 years. Lease payments are to be made annually and in advance. The first payment is to be made on 1 July 2020. Each lease payment is to amount to $100 000. At the end of the lease, the expected residual value of the helicopter is $50 000. Gordon Ltd guarantees the residual value of the helicopter in full. The interest rate implicit in the lease is 5%. At the start of the lease, what amount should Gordon Ltd use to record the right to use asset in their books?

a. $372 325

b. $285 941

c. $315 517

d. $329 133

Reference no: EM132529174

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