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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) Situation 1 2 3 4 Lease term (years) 4 7 5 8 Lessor's rate of return 10% 11% 9% 12% Fair value of lease $ $ $ $ asset 50,000 350,000 75,000 465,000 Lessor's cost of lease asset $ $ $ $ 50,000 350,000 45,000 465,000 Residual value: $ $ Estimated fair value 0 50,000 $ 7,000 45,000 $ Guaranteed fair value 0 0 $ 7,000 50,000 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.

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) Situation 1 2 3 4 Lease term (years) 4 7 5 8 Lessor's rate of return 10% 11% 9% 12% Fair value of lease $ $ $ $ asset 50,000 350,000 75,000 465,000 Lessor's cost of lease asset $ $ $ $ 50,000 350,000 45,000 465,000 Residual value: $ $ Estimated fair value 0 50,000 $ 7,000 45,000 $ Guaranteed fair value 0 0 $ 7,000 50,000 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.

FINANCIAL ACCOUNTING
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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S 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) Situation 1 2 3 4 Lease term (years) Lessor's rate of return 4 7 5 8 10% 11% 9% 12% Fair value of lease $ $ $ $ asset 50,000 350,000 75,000 465,000 Lessor's cost of lease asset $ $ $ $ 50,000 350,000 45,000 465,000 Residual value: $ Estimated fair value 0 50,000 $ 7,000 45,000 $ Guaranteed fair value 0 0 $ 7,000 50,000 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. Lease Payments Residual Value Guarantee PV of Lease Payments Situation 1 PV of Residual Right-of-use Asset/Lease Liability Guarantee Value Situation 2 Situation 3 Situation 4
Transcribed Image Text:S 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) Situation 1 2 3 4 Lease term (years) Lessor's rate of return 4 7 5 8 10% 11% 9% 12% Fair value of lease $ $ $ $ asset 50,000 350,000 75,000 465,000 Lessor's cost of lease asset $ $ $ $ 50,000 350,000 45,000 465,000 Residual value: $ Estimated fair value 0 50,000 $ 7,000 45,000 $ Guaranteed fair value 0 0 $ 7,000 50,000 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. Lease Payments Residual Value Guarantee PV of Lease Payments Situation 1 PV of Residual Right-of-use Asset/Lease Liability Guarantee Value Situation 2 Situation 3 Situation 4
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