Answered: Determine the following amounts at the…

Determine the following amounts at the beginning of the lease: (Round your intermediate and final answer to the nearest whole dollar amount.)

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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Concept explainers

Leasing

Leasing is a contractual arrangement in which someone (a lessee) pays the owner (or lessor) of a building, land, vehicle, or other asset for the use of that asset. The lease is the agreement between lessee and lessor.

Question

Each of the four independent situations below describes a sales-type lease in which annual lease payments of $130,000 are payable
at the beginning of each year. Each is a finance lease for the lessee. (FV of $1, PV of $1, FVA of $1, PVA of $1, EVAD of $1 and PVAD of
$1) (Use appropriate factor(s) from the tables provided.)
Situation
2
4
Lease term ( years)
Lessor's and lessen's interest rate
8
10%
11%
Residual value:
Estimated fair value
Guaranteed by lessee
$56,000
$8,600
$日,600
$56,000
$66,000
Determine the following amounts at the beginning of the lease: (Round your intermediate and final answer to the nearest whole
dollar amount.)
Answer is complete but not entirely correct.
Situation
A
The lessor's:
1. Total lease payments
$ 910,000
$ 910,000
$ 1,040,000
1,040.000
2. Gross investment in the
lease
3. Net investment in the lease
The lessee's:
910,000
966,000
1,048,600
1,162,000
730,974
724,921 O
792,916
771.224
B
4. Total lease payments
910,000
910,000
1,040,000
1,106,000
5. Right-of-use asset
6. Lease liability
730,974
696,184
788,600
771,225
730,974
696,184
788,600
771.225

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