Date of lease-7/1/19 Term 3 years (expires 7/1/22) •Semi annual lease payments of $100,000 every 7/1 and 1/1 Lessee's incremental borrowing rate-6% •Lessor's implicit rate of return -5% (NOT known to lessee) ■Lessor's cost of assel leased - $250,000 • Guaranteed residual value - $70,000 lessen believes fair value of the asset at the end of the lease will be greater than $70,000) •Lessee and Lessor both have a December 31st yearend Requirements: 1. Assume the lease is treated as a finance lease: a. Determine the present value of the lease payments b. Prepare an amortization table for the lease payments for the lessee. Determine the fair value of the lease from perspective e. Prepare the lessor's amortization table for this loase.
Date of lease-7/1/19 Term 3 years (expires 7/1/22) •Semi annual lease payments of $100,000 every 7/1 and 1/1 Lessee's incremental borrowing rate-6% •Lessor's implicit rate of return -5% (NOT known to lessee) ■Lessor's cost of assel leased - $250,000 • Guaranteed residual value - $70,000 lessen believes fair value of the asset at the end of the lease will be greater than $70,000) •Lessee and Lessor both have a December 31st yearend Requirements: 1. Assume the lease is treated as a finance lease: a. Determine the present value of the lease payments b. Prepare an amortization table for the lease payments for the lessee. Determine the fair value of the lease from perspective e. Prepare the lessor's amortization table for this loase.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
am. 101.
Transcribed Image Text:Date of lease-7/1/19
Term 3 years (expires 7/1/22)
•Semi annual lease payments of $100,000 every 7/1 and 1/1
Lessee's incremental borrowing rate-6%
•Lessor's implicit rate of return -5% (NOT known to lessee)
■Lessor's cost of assel leased - $250,000
• Guaranteed residual value - $70,000 lessen believes fair value of the asset at the end of the lease will be greater than $70,000)
•Lessee and Lessor both have a December 31st yearend
Requirements: 1. Assume the lease is treated as a finance lease: a. Determine the present value of the lease payments b. Prepare an amortization table for the lease payments for the lessee. Determine the fair value of the lease from
perspective e. Prepare the lessor's amortization table for this loase.
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