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On January 1, Garcia Supply leased a truck for a four-year period, at which time...

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Accounting

On January 1, Garcia Supply leased a truck for a four-year period, at which time possession of the
truck will revert back to the lessor. Annual lease payments are $10,000 due on December 31 of
each year, calculated by the lessor using a 5% discount rate. Negotiations led to Garcia
guaranteeing a $36,000 residual value at the end of the lease term. Garcia estimates that the
residual value after four years will be $35,000.
What is the amount to be added to the right-of-use asset and lease liability under the residual value
guarantee?
Note: Use tables, Excel, or a financial calculator. Enter your answer in whole dollars. (FV of
$1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)
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