Sandhill, Inc. leased equipment from Tower Company under a 4-year lease requiring equal annual payments...
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Sandhill, Inc. leased equipment from Tower Company under a 4-year lease requiring equal annual payments of $424152, with the first payment due at lease inception. The lease does not transfer ownership, nor is there a bargain purchase option. The equipment has a 4-year useful life and no salvage value. If Sandhill, Inc.s incremental borrowing rate is 10% and the rate implicit in the lease (which is known by Sandhill, Inc.) is 8%, what is the amount recorded for the leased asset at the lease inception?
| PV Annuity Due | PV Ordinary Annuity | |
| 8%, 4 periods | 3.57710 | 3.31213 |
| 10%, 4 periods | 3.48685 | 3.16987 |
$1344507
$1517234
$1404847
$1478954
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