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On December 31, 2020, Reagan Inc. signed a lease with Silver Leasing Co. for some equipment having a seven-year useful life.

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Answer #1

The residual value guaranteed by Reagan to the lessor is $31,900 which in the year 2026

The $79,700 is the annual lease payments paid at the beginning of each year and in 2026 the residual value guaranteed  by the lessor to lessee is $31,900

This guaranteed residual value is discounted to the present value by the lessor and recorded in books.

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