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4. Total lease payments 1,110,000 1,110,000 1,295,000 1,295,000

4. Total lease payments 1,110,000 1,110,000 1,295,000 1,295,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Each of the four independent situations below describes a sales-type lease in which annual lease payments of $185,000 are payable at the beginning of each year. Each is a finance lease for the lessee. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Lease term (years) Lessor's and lessee's interest rate Residual value: Estimated fair value Guaranteed by lessee A. The lessor's: 1. Total lease payments 2. Gross investment in the lease 3. Net investment in the lease B. The lessee's: 4. Total lease payments 5. Right-of-use asset 6. Lease liability $ 1 1,110,000 1,110,000 904,585✔ 1,110,000 904,585 904,585 2 1 $0 $0 6 9% Determine the following amounts at the beginning of the lease. Note: Round your intermediate and final answers to the nearest whole dollar amount. Answer is complete but not entirely correct. $ 1,110,000 1,177,000 904,562 Situation 1,110,000 868,741 3 2 Situation $ 67,000 $0 $ 1,295,000 6 11% 1,295,000 990,723 868,741✔ 990,723 $ 3 4 $ 9,700 $ 9,700 1,295,000 1,304,700 1,372,000 995,701✔ 980,442 ✔ 7 10% 1,295,000 X 950,134✔ 950,134 4 7 12% $ 67,000 $ 77,000
Transcribed Image Text:Each of the four independent situations below describes a sales-type lease in which annual lease payments of $185,000 are payable at the beginning of each year. Each is a finance lease for the lessee. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Lease term (years) Lessor's and lessee's interest rate Residual value: Estimated fair value Guaranteed by lessee A. The lessor's: 1. Total lease payments 2. Gross investment in the lease 3. Net investment in the lease B. The lessee's: 4. Total lease payments 5. Right-of-use asset 6. Lease liability $ 1 1,110,000 1,110,000 904,585✔ 1,110,000 904,585 904,585 2 1 $0 $0 6 9% Determine the following amounts at the beginning of the lease. Note: Round your intermediate and final answers to the nearest whole dollar amount. Answer is complete but not entirely correct. $ 1,110,000 1,177,000 904,562 Situation 1,110,000 868,741 3 2 Situation $ 67,000 $0 $ 1,295,000 6 11% 1,295,000 990,723 868,741✔ 990,723 $ 3 4 $ 9,700 $ 9,700 1,295,000 1,304,700 1,372,000 995,701✔ 980,442 ✔ 7 10% 1,295,000 X 950,134✔ 950,134 4 7 12% $ 67,000 $ 77,000
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