Each of the four independent situations below describes a finance lease in which annual lease payments are payable at the beginning of each year. The lessee is aware of the lessor's implicit rate of return. 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 rate of return Fair value of lease asset Lessor's cost of lease asset Residual value: Estimated fair value Guaranteed fair value Situation 1 Situation 2 Situation 3 Situation 4 Lease Payments 1 $ 54,000 $ 54,000 Residual Value Guarantee 6 9% 0 0 $ 2 PV of Lease Payments Situation $ 354,000 $ 354,000 9 10% $ 54,000 0 54,000 3 7 8% $ 79,000 $ 49,000 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. Note: Round your answers to the nearest whole dollar amount. $ 11,000 $ 11,000 PV of Residual Value Guarantee 4 10 11% 54000 $469,000 $469,000 $ 49,000 $ 54,000 Right-of-use Asset/Lease Liability
Each of the four independent situations below describes a finance lease in which annual lease payments are payable at the beginning of each year. The lessee is aware of the lessor's implicit rate of return. 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 rate of return Fair value of lease asset Lessor's cost of lease asset Residual value: Estimated fair value Guaranteed fair value Situation 1 Situation 2 Situation 3 Situation 4 Lease Payments 1 $ 54,000 $ 54,000 Residual Value Guarantee 6 9% 0 0 $ 2 PV of Lease Payments Situation $ 354,000 $ 354,000 9 10% $ 54,000 0 54,000 3 7 8% $ 79,000 $ 49,000 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. Note: Round your answers to the nearest whole dollar amount. $ 11,000 $ 11,000 PV of Residual Value Guarantee 4 10 11% 54000 $469,000 $469,000 $ 49,000 $ 54,000 Right-of-use Asset/Lease Liability
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Exercise 15-24 (Algo) Calculation of annual lease payments; residual value [LO15-2, 15-6]
Each of the four independent situations below describes a finance lease in which annual lease payments are payable at the beginning
of each year. The lessee is aware of the lessor's implicit rate of return.
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 rate of return
Fair value of lease asset
Lessor's cost of lease asset
Residual value:
Estimated fair value
Guaranteed fair value
Situation 1
Situation 2
Situation 3
Situation 4
Lease Payments
1
$ 54,000
$ 54,000
Residual Value
Guarantee
6
9%
0
0
$
2
PV of Lease
Payments
Situation
$ 354,000
$ 354,000
9
10%
$ 54,000
0
54,000
3
7
8%
$ 79,000
$ 49,000
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.
Note: Round your answers to the nearest whole dollar amount.
$ 11,000
$ 11,000
PV of Residual
Value Guarantee
4
10
11%
54000
$ 469,000
$469,000
$ 49,000
$ 54,000
Right-of-use
Asset/Lease
Liability](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbf1ef2c8-fbe2-49ff-9ab2-e24f07c3cc20%2F316064bc-f84f-4976-9f08-286858f7d2d6%2Fzr7gpym_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Exercise 15-24 (Algo) Calculation of annual lease payments; residual value [LO15-2, 15-6]
Each of the four independent situations below describes a finance lease in which annual lease payments are payable at the beginning
of each year. The lessee is aware of the lessor's implicit rate of return.
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 rate of return
Fair value of lease asset
Lessor's cost of lease asset
Residual value:
Estimated fair value
Guaranteed fair value
Situation 1
Situation 2
Situation 3
Situation 4
Lease Payments
1
$ 54,000
$ 54,000
Residual Value
Guarantee
6
9%
0
0
$
2
PV of Lease
Payments
Situation
$ 354,000
$ 354,000
9
10%
$ 54,000
0
54,000
3
7
8%
$ 79,000
$ 49,000
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.
Note: Round your answers to the nearest whole dollar amount.
$ 11,000
$ 11,000
PV of Residual
Value Guarantee
4
10
11%
54000
$ 469,000
$469,000
$ 49,000
$ 54,000
Right-of-use
Asset/Lease
Liability
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