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 9% Lease Payments $ 62,000 $ 62,000 Situation 10% $ 362,000 $362,000 $ 62,000 e Residual Value PV of Lease Guarantee Payments 8% $ 87,000 $ 57,000 $ 19,000 $ 19,000 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. PV of Residual Value Guarantee 11% $ 477,000 $ 477,000 $ 31,000 $ 36,000 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 9% Lease Payments $ 62,000 $ 62,000 Situation 10% $ 362,000 $362,000 $ 62,000 e Residual Value PV of Lease Guarantee Payments 8% $ 87,000 $ 57,000 $ 19,000 $ 19,000 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. PV of Residual Value Guarantee 11% $ 477,000 $ 477,000 $ 31,000 $ 36,000 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
5
9%
Lease Payments
$ 62,000
$ 62,000
0
0
2
Situation
8
18%
$362,000
$ 362,000
Residual Value PV of Lease
Guarantee Payments
$ 62,000
0
6
8%
$ 87,000
$ 57,000
$ 19,000
$ 19,000
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.
PV of Residual
Value Guarantee
9
11%
$ 477,000
$ 477,000
$ 31,000
$ 36,000
Right-of-use
Asset/Lease
Liability](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F11d8e5b4-29f6-4b52-96af-aad60dfbfbd6%2F49e76249-008d-454c-b891-5d215ae1f450%2Ffm5n1hk_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
5
9%
Lease Payments
$ 62,000
$ 62,000
0
0
2
Situation
8
18%
$362,000
$ 362,000
Residual Value PV of Lease
Guarantee Payments
$ 62,000
0
6
8%
$ 87,000
$ 57,000
$ 19,000
$ 19,000
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.
PV of Residual
Value Guarantee
9
11%
$ 477,000
$ 477,000
$ 31,000
$ 36,000
Right-of-use
Asset/Lease
Liability
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