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 2 3 Lease term (years) Lessor's rate of return Fair value of lease asset 4 10% 7 11% 5 8 9% 12% $ 64,000 Lessor's cost of lease asset $ 64,000 $ 364,000 $ 364,000 $ 89,000 $ 59,000 $ 479,000 $ 479,000 Residual value: Estimated fair value $ 64,000 $ 21,000 $ 33,000 Guaranteed fair value 0 0 $ 21,000 $ 38,000 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.
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 2 3 Lease term (years) Lessor's rate of return Fair value of lease asset 4 10% 7 11% 5 8 9% 12% $ 64,000 Lessor's cost of lease asset $ 64,000 $ 364,000 $ 364,000 $ 89,000 $ 59,000 $ 479,000 $ 479,000 Residual value: Estimated fair value $ 64,000 $ 21,000 $ 33,000 Guaranteed fair value 0 0 $ 21,000 $ 38,000 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![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)
Lessor's rate of return
Fair value of lease asset
4
10%
7
11%
5
9%
8
12%
$ 64,000
$ 364,000
$ 89,000
Lessor's cost of lease asset
$ 64,000
$ 364,000
$ 59,000
$ 479,000
$ 479,000
Residual value:
Estimated fair value
0
$ 64,000
$ 21,000
$ 33,000
Guaranteed fair value
0
0
$ 21,000
$ 38,000
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.
Right-of-use
Lease Payments
Residual Value
Guarantee
PV of Lease
Payments
PV of Residual
Value Guarantee
Asset/Lease
Liability
Situation 1
$
15,773
$
50,000
Situation 2
Situation 3
Situation 4](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F91fdd923-b282-4ce4-82a5-049892364cc3%2Fa4ebe28c-3a7d-4163-92de-a7042fd67513%2F8nfi40m_processed.png&w=3840&q=75)
Transcribed Image Text: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)
Lessor's rate of return
Fair value of lease asset
4
10%
7
11%
5
9%
8
12%
$ 64,000
$ 364,000
$ 89,000
Lessor's cost of lease asset
$ 64,000
$ 364,000
$ 59,000
$ 479,000
$ 479,000
Residual value:
Estimated fair value
0
$ 64,000
$ 21,000
$ 33,000
Guaranteed fair value
0
0
$ 21,000
$ 38,000
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.
Right-of-use
Lease Payments
Residual Value
Guarantee
PV of Lease
Payments
PV of Residual
Value Guarantee
Asset/Lease
Liability
Situation 1
$
15,773
$
50,000
Situation 2
Situation 3
Situation 4
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