Meman 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 asset.Lessor's cost of lease assetResidual value:Estimated fair valueGuaranteed fair valueSituation 1Situation 2Situation 3Situation 4Lease Payments$16,2741$$$59%$ 69,000$ 69,000000 $00Residual Value PV of LeaseGuarantee Payments2Situation$369,000$ 369,000$ 69,000069,000810%Required:a. & b. Determine the amount of the annual lease payments as calculated by the lessor and the amount the lessee would record as aright-of-use asset and a lease liability, for each of the above situations.Note: Round your answers to the nearest whole dollar amount.3$$$$ 94,000$ 64,00068%$ 26,000$ 26,000PV of ResidualValue Guarantee0004$911%$ 484,000$ 484,000$ 38,000$ 43,000Right-of-useAsset/LeaseLiability69,000

Lease is an agreement between two parties to rent an asset at an agreed consideration for a…

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 5 9% $ 69,000 $ 69,000 0 0 2 Situation 8 10% $369,000 $369,000 $ 69,000 0 3 6 8% $94,000 $ 64,000 $ 26,000 $ 26,000 4 9 11% $ 484,000 $ 484,000 $ 38,000 $ 43,000 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 5 9% $ 69,000 $ 69,000 0 0 2 Situation 8 10% $369,000 $369,000 $ 69,000 0 3 6 8% $94,000 $ 64,000 $ 26,000 $ 26,000 4 9 11% $ 484,000 $ 484,000 $ 38,000 $ 43,000 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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Concept explainers

Leasing

Leasing is a contractual arrangement in which someone (a lessee) pays the owner (or lessor) of a building, land, vehicle, or other asset for the use of that asset. The lease is the agreement between lessee and lessor.

Question

Meman

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
$
16,274
1
$
$
$
5
9%
$ 69,000
$ 69,000
0
0
0 $
0
0
Residual Value PV of Lease
Guarantee Payments
2
Situation
$369,000
$ 369,000
$ 69,000
0
69,000
8
10%
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.
3
$
$
$
$ 94,000
$ 64,000
6
8%
$ 26,000
$ 26,000
PV of Residual
Value Guarantee
0
0
0
4
$
9
11%
$ 484,000
$ 484,000
$ 38,000
$ 43,000
Right-of-use
Asset/Lease
Liability
69,000

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