What will be the carrying value of the machine at december

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Reference no: EM132775849

Problem 1: Jarvis Company leased a new machine beginning on January 1, 20X1. The lease, which has an interest rate of 6%, is for 5 years and requires annual payments of $10,000 on each December 31. The present value of an ordinary annuity of $1 at 6% for 5 periods is 4.212. Title to the machine remains with the lessor. The machine, which cost the lessor $30,000, has a useful life of 6 years and will be depreciated on a straight-line basis. What will be the carrying value of the machine at December 31, 20X2?

A. $28,080 on the lessee's books

B. $25,272 on the lessee's books

C. $20,000 on the lessor's books

D. $18,000 on the lessor's books

Reference no: EM132775849

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