Determine the following amounts at the beginning of the lease: Note: Round your final answers to nearest whole dollar. 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 70,000 2 Situation 70,000 3 70,000
Determine the following amounts at the beginning of the lease: Note: Round your final answers to nearest whole dollar. 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 70,000 2 Situation 70,000 3 70,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Each of the four independent situations below describes a sales-type lease in which annual lease payments of $17,500 are payable at
the beginning of each year. Each is a finance lease for the lessee.
Lease term (years)
Asset's useful life (years)
Lessor's implicit rate (known by lessee)
Residual value:
Guaranteed by lessee.
Unguaranteed
Purchase option:
After (years)
Exercise price
Determine the following amounts at the beginning of the lease:
Note: Round your final answers to nearest whole dollar.
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
70,000
2
Situation
1
70,000
4
4
8%
$0
$0
none
3
2
70,000
Situation
4
Reasonably certain?
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)
8%
$ 7,000
$0
4
$ 8,500
no
4
5
8%
$3,500
$ 3,500
$ 2,500
no
4
4
7
8%
$0
$ 7,000
3
$ 4,500
yes
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