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) 5 8 6 9 Lessor's rate of return 9% 10% 8% 11% Fair value of lease asset $ 69,000 $ 369,000 $ 94,000 $ 484,000 Lessor's cost of lease asset $ 69,000 $ 369,000 $ 64,000 $ 484,000 Residual value:         Estimated fair value 0 $ 69,000 $ 26,000 $ 38,000 Guaranteed fair value 0 0 $ 26,000 $ 43,000

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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) 5 8 6 9
Lessor's rate of return 9% 10% 8% 11%
Fair value of lease asset $ 69,000 $ 369,000 $ 94,000 $ 484,000
Lessor's cost of lease asset $ 69,000 $ 369,000 $ 64,000 $ 484,000
Residual value:        
Estimated fair value 0 $ 69,000 $ 26,000 $ 38,000
Guaranteed fair value 0 0 $ 26,000 $ 43,000
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