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 Lease term (years) Lessor's rate of return Fair value of lease asset 6 10% $ 58,000 Lessor's cost of lease asset $ 58,000 9 11% $ 358,000 $ 358,000 7 9% 10 12% $ 83,000 $ 53,000 $473,000 $ 473,000 Residual value: Estimated fair value 0 $ 58,000 $ 15,000 $ 30,000 Guaranteed fair value 0 $ 15,000 $ 35,000 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 lease liability, for each of the above situations. ubole dollar amount +

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 Lease term (years) Lessor's rate of return Fair value of lease asset 6 10% $ 58,000 Lessor's cost of lease asset $ 58,000 9 11% $ 358,000 $ 358,000 7 9% 10 12% $ 83,000 $ 53,000 $473,000 $ 473,000 Residual value: Estimated fair value 0 $ 58,000 $ 15,000 $ 30,000 Guaranteed fair value 0 $ 15,000 $ 35,000 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 lease liability, for each of the above situations. ubole dollar amount +

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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Each of the four independent situations below describes a sales-type lease in which annual lease payments a at the beginning of each year. Each is a finance lease for the lessee. (FV of $1, PV of $1, FVA of $1, PVA of $1, $1) (Use appropriate factor(s) from the tables provided.) Situation 1 2 3 Lease term (years) 7 7 8 Lessor's and lessee's interest rate Residual value: 8 128 98 11% 10% Estimated fair value 0 $50,000 $8,000 $50,000 Guaranteed by lessee 0 0 $8,000 $60,000 Determine the following amounts at the beginning of the lease. (Round your intermediate and final answers dollar amount.) Situation 2 A The lessor's: 1. Lease payments 2. Gross investment in the lease 3. Net investment in the lease The lessee's: 4. Lease payments 5. Right-of-use asset 6. Lease payable B
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Manji
Check my work mode: This shows what is correct or in Each of the four independent situations below describes a sales-type lease in which annual leas the beginning of each year. Each is a finance lease for the lessee. (FV of $1. PV of $1. EVA of $1. (Use appropriate factor(s) from the tables provided.) Lease term (years) Asset's useful life (years) Lessor's implicit rate (known by lessee) Residual value: Guaranteed by lessee Unguaranteed Purchase option: After (years). Exercise price Reasonably certain? Situation 1 2 3 4 4 4 4 4 4 5 5 7 11% 11% 11% 11% $4,000 $2,000 e 0 е $2,000 $ 4,000 none 3 4 3 n/a $ 7,000 $1,000 $3,000 n/a no no yes Determine the following amounts at the beginning of the lease: (Round your final answers to nee Answer is complete but not entirely correct. Situation 1 2 3 4 A The lessor's: 1 Total lease payments $ 40,000 $ 44,000 S 42,000 $ 33,000 2 Gross investment in the lease 40,000 44,000 44,000 37,000 × 3. Net investment in the lease 34,437 37,072 37,072 32,244…
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