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 10% $ 58,000 $ 58,000 0 0 2 Situation 9 11% $ 358,000 $ 358,000 $ 58,000 0 3 7 9% $ 83,000 $ 53,000 $ 15,000 $ 15,000 4 10 12% $ 473,000 $ 473,000 $30,000 $ 35,000
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 10% $ 58,000 $ 58,000 0 0 2 Situation 9 11% $ 358,000 $ 358,000 $ 58,000 0 3 7 9% $ 83,000 $ 53,000 $ 15,000 $ 15,000 4 10 12% $ 473,000 $ 473,000 $30,000 $ 35,000
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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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
$
$
$
$
6
10%
$ 58,000
$ 58,000
0
10
10
5,000
0
0
2
Residual Value PV of Lease
Guarantee Payments
Situation
$ 358,000
$ 358,000
9
11%
$ 58,000
0
$
$
$
3
$ 83,000
$ 53,000
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.
4
7
9%
$ 15,000
$ 15,000
PV of Residual
Value Guarantee
0
0
0
4
10
12%
$ 473,000
$ 473,000
$ 30,000
$ 35,000
Right-of-use
Asset/Lease
Liability](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F98c24448-c00a-4765-92eb-f35cb8a960b5%2F672a86eb-90e8-4b47-8d69-e5ef211f91ca%2F2lxt41_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
$
$
$
$
6
10%
$ 58,000
$ 58,000
0
10
10
5,000
0
0
2
Residual Value PV of Lease
Guarantee Payments
Situation
$ 358,000
$ 358,000
9
11%
$ 58,000
0
$
$
$
3
$ 83,000
$ 53,000
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.
4
7
9%
$ 15,000
$ 15,000
PV of Residual
Value Guarantee
0
0
0
4
10
12%
$ 473,000
$ 473,000
$ 30,000
$ 35,000
Right-of-use
Asset/Lease
Liability
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