On January 1, 20X6, Penny Corp. purchased equipment from a manufacturer for $120,000 and immediately leased...

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On January 1, 20X6, Penny Corp. purchased equipment from a manufacturer for $120,000 and immediately leased it to Dragonstone Ltd. Dragonstone reports its financial results in accordance with IFRS. Other pertinent details follow: . The lease term is five years. The economic life of the equipment is six years. The fair value of the equipment is $120,000. Dragonstone is required to make annual payments of $25,880, with the first payment due at the inception of the lease (January 1, 20X6). • Dragonstone must return the equipment to Penny at the end of the lease term. The unguaranteed residual value of the equipment at the lease-term end is $3,000. • Penny's required rate of return (the implicit interest rate) for transactions of this nature is 5%. This rate is readily determinable by Dragonstone. Dragonstone's incremental borrowing rate for transactions of this nature is 6%. What amount should Dragonstone record as a lease liability on inception of the lease? $117,649 $94,120 $89,677 d. $91,769 On January 1, 20X6, Penny Corp. purchased equipment from a manufacturer for $120,000 and immediately leased it to Dragonstone Ltd. Dragonstone reports its financial results in accordance with IFRS. Other pertinent details follow: . The lease term is five years. The economic life of the equipment is six years. The fair value of the equipment is $120,000. Dragonstone is required to make annual payments of $25,880, with the first payment due at the inception of the lease (January 1, 20X6). • Dragonstone must return the equipment to Penny at the end of the lease term. The unguaranteed residual value of the equipment at the lease-term end is $3,000. • Penny's required rate of return (the implicit interest rate) for transactions of this nature is 5%. This rate is readily determinable by Dragonstone. Dragonstone's incremental borrowing rate for transactions of this nature is 6%. What amount should Dragonstone record as a lease liability on inception of the lease? $117,649 $94,120 $89,677 d. $91,769

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