appropriate factor(s) from the tables provided.) term (years) 's rate of return (known by lessee) 's incremental borrowing rate alue of lease asset. 1 2 3 1 9 12% 10% $670,000 Lease Payments Situation 2 15 10% 11% $1,015,000 d: etermine the amount of the annual lease payments as calculated by the lessor and the amount the lessee would record f-use asset and a lease liability, for each of the above situations. (Round your answers to the nearest whole dollar.) Right-of-use Asset/Lease Payable 3 5 10% 9% $220,000
appropriate factor(s) from the tables provided.) term (years) 's rate of return (known by lessee) 's incremental borrowing rate alue of lease asset. 1 2 3 1 9 12% 10% $670,000 Lease Payments Situation 2 15 10% 11% $1,015,000 d: etermine the amount of the annual lease payments as calculated by the lessor and the amount the lessee would record f-use asset and a lease liability, for each of the above situations. (Round your answers to the nearest whole dollar.) Right-of-use Asset/Lease Payable 3 5 10% 9% $220,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![Each of the three independent situations below describes a finance lease in which annual lease payments are payable at the end of
each year. The lessee is aware of the lessor's implicit rate of return. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of
$1) (Use appropriate factor(s) from the tables provided.)
Lease term (years)
Lessor's rate of return (known by lessee)
Lessee's incremental borrowing rate
Fair value of lease asset
Situation 1
Situation 2
Situation 3
Lease Payments
Right-of-use Asset/Lease
1
9
Payable
12%
10%
$670,000
Required:
a. & b. Determine the amount of the annual lease payments as calculated by the lessor and the amount the lessee would record as
a right-of-use asset and a lease liability, for each of the above situations. (Round your answers to the nearest whole dollar.)
Situation
2
15
10%
11%
$1,015,000
3
5
10%
9%
$220,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe890579c-94a4-423d-91dd-4fb21feea66a%2F4e65da22-2a49-4756-a24d-389e3d608025%2F2yusj5a_processed.png&w=3840&q=75)
Transcribed Image Text:Each of the three independent situations below describes a finance lease in which annual lease payments are payable at the end of
each year. The lessee is aware of the lessor's implicit rate of return. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of
$1) (Use appropriate factor(s) from the tables provided.)
Lease term (years)
Lessor's rate of return (known by lessee)
Lessee's incremental borrowing rate
Fair value of lease asset
Situation 1
Situation 2
Situation 3
Lease Payments
Right-of-use Asset/Lease
1
9
Payable
12%
10%
$670,000
Required:
a. & b. Determine the amount of the annual lease payments as calculated by the lessor and the amount the lessee would record as
a right-of-use asset and a lease liability, for each of the above situations. (Round your answers to the nearest whole dollar.)
Situation
2
15
10%
11%
$1,015,000
3
5
10%
9%
$220,000
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