7 Each of the four independent situations below describes a finance lease in which annual lease payments are payable at the beginningof 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 returnFair value of lease assetLessor's cost of lease assetResidual value:Estimated fair valueGuaranteed fair valueSituation 1Situation 2Situation 3Situation 4Lease Payments$$$$$$13,82444,65011,009 $60,1461LA GA69%$ 68,000$ 68,0000000Residual Value PV of LeaseGuaranteePayments2Situation$368,000$368,000$ 68,0000Required:a. & b. Determine the amount of the annual lease payments as calculated by the lessor and the amount the lessee would record as aright-of-use asset and a lease liability, for each of the above situations.Note: Round your answers to the nearest whole dollar amount.910%SAS$3$$PV of ResidualValue Guarantee78%$ 93,000$ 63,000$ 25,000$ 25,0000$0 $0SA$$1011%CA$ 483,000$ 483,000$ 37,000$ 42,000Right-of-useAsset/LeaseLiability68,000368,00093,000483,000

A lease is defined as a contractual agreement incorporated between two business entities where one…

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 1 6 9% $ 68,000 $ 68,000 0 0 2 Situation 9 10% $368,000 $368,000 $ 68,000 0 3 7 8% $ 93,000 $ 63,000 $25,000 $ 25,000 4 10 11% $ 483,000 $ 483,000 $ 37,000 $ 42,000 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.

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 1 6 9% $ 68,000 $ 68,000 0 0 2 Situation 9 10% $368,000 $368,000 $ 68,000 0 3 7 8% $ 93,000 $ 63,000 $25,000 $ 25,000 4 10 11% $ 483,000 $ 483,000 $ 37,000 $ 42,000 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.

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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