Steadman Savings and Loan Company acquires a piece of specialized hospital equipment for $1,000,000 that it leases
Question:
Steadman Savings and Loan Company acquires a piece of specialized hospital equipment for $1,000,000 that it leases on January 1, 2008, to a local hospital for $253,090 per year, payable in advance. Because of rapid technological developments, the equipment is expected to be replaced after four years. It is expected that the machine will have a residual value of $150,000 to Steadman Savings at the end of the lease term. The implicit rate of interest in the lease is 9%.
1. Prepare a 4-year table for Steadman Savings and Loan similar to Exhibit 15-8.
2. How would the table differ if the local hospital guaranteed the residual value to Steadman?
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Related Book For
Intermediate Accounting
ISBN: 978-0324312140
16th Edition
Authors: James D. Stice, Earl K. Stice, Fred Skousen
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