Question: Use the information for Escapee plc from BE21.18. Assume the same facts, except Escapee guarantees a residual value of 9,000 at the end of the

Use the information for Escapee plc from BE21.18. Assume the same facts, except Escapee guarantees a residual value of £9,000 at the end of the lease term, which equals the expected residual value of the machinery.
(a) Does this change your answer from BE21.17?
(b) What if the expected residual value at the end of the lease term is £5,000 and Escapee guarantees a residual of £9,000?
On December 31, 2018, Escapee plc leased machinery from Terminator Group for an agreed-upon lease term of 3 years. Escapee agreed to make annual lease payments of £17,000, beginning on December 31, 2018. The expected residual value of the machinery at the end of the lease term is £9,000, though Escapee does not guarantee any residual value to Terminator. What amount will Escapee record as its lease liability on December 31, 2018, if its incremental borrowing rate is 6% and the implicit rate of the lease is unknown?

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