Wildhorse Services Inc. accounts for right-of-use assets under IFRS 16 for a lease of a truck. The lease includes a residual value guarantee at the end of the lease term of $21,000. Wildhorse estimates that the likelihood for the residual value of $21,000 has a 55% certainty. Wildhorse feels that there is a 20% chance that the residual value will be $15,600 and a 25% chance that it will be $14,300.

Calculate the probability-weighted value of the residual guarantee that needs to be included in the lease payments liability recorded by Wildhorse when the lease is signed.

Answer rating: 100% (QA)

Step 1 Formulation C5 A 1 Amount 2 21000 3 15600 4 14300 5 Step 2 Comput... View the full answer