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Each of the four independent situations below describes a sales-type lease in which annual lease payments of $130,000 are payable at the beginning of each year. Each is a finance lease for the lessee. 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) 7 Lessor's and lessee's interest rate 8% 7 10% 8 9% 8 11% Residual value: Estimated fair value $ 0 $ 0 $ 56,000 $ 0 $ 8,600 $ 56,000 $ 8,600 $ 66,000 Guaranteed by lessee Determine the following amounts at the beginning of the lease. Note: Round your intermediate and final answers to the nearest whole dollar amount. Situation 1 2 3 4 A. The lessor's: 1. Total lease payments $ 910,000 $ 910,000 $ 1,040,000 2. Gross investment in the lease 910,000 966,000 $1,040,000 1,048,600 1,106,000 3. Net investment in the lease 730,974 724,921 788,600 771,225 B. The lessee's: 4. Total lease payments 910,000 910,000 1,040,000 5. Right-of-use asset 730,974 6. Lease liability 730,974

Each of the four independent situations below describes a sales-type lease in which annual lease payments of $130,000 are payable at the beginning of each year. Each is a finance lease for the lessee. 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) 7 Lessor's and lessee's interest rate 8% 7 10% 8 9% 8 11% Residual value: Estimated fair value $ 0 $ 0 $ 56,000 $ 0 $ 8,600 $ 56,000 $ 8,600 $ 66,000 Guaranteed by lessee Determine the following amounts at the beginning of the lease. Note: Round your intermediate and final answers to the nearest whole dollar amount. Situation 1 2 3 4 A. The lessor's: 1. Total lease payments $ 910,000 $ 910,000 $ 1,040,000 2. Gross investment in the lease 910,000 966,000 $1,040,000 1,048,600 1,106,000 3. Net investment in the lease 730,974 724,921 788,600 771,225 B. The lessee's: 4. Total lease payments 910,000 910,000 1,040,000 5. Right-of-use asset 730,974 6. Lease liability 730,974

FINANCIAL ACCOUNTING
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 of $130,000 are payable at the beginning of each year. Each is a finance lease for the lessee. 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) 7 Lessor's and lessee's interest rate 8% 7 10% 8 9% 8 11% Residual value: Estimated fair value $ 0 $ 0 $ 56,000 $ 0 $ 8,600 $ 56,000 $ 8,600 $ 66,000 Guaranteed by lessee Determine the following amounts at the beginning of the lease. Note: Round your intermediate and final answers to the nearest whole dollar amount. Situation 1 2 3 4 A. The lessor's: 1. Total lease payments $ 910,000 $ 910,000 $ 1,040,000 2. Gross investment in the lease 910,000 966,000 $1,040,000 1,048,600 1,106,000 3. Net investment in the lease 730,974 724,921 788,600 771,225 B. The lessee's: 4. Total lease payments 910,000 910,000 1,040,000 5. Right-of-use asset 730,974 6. Lease liability 730,974
Transcribed Image Text:Each of the four independent situations below describes a sales-type lease in which annual lease payments of $130,000 are payable at the beginning of each year. Each is a finance lease for the lessee. 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) 7 Lessor's and lessee's interest rate 8% 7 10% 8 9% 8 11% Residual value: Estimated fair value $ 0 $ 0 $ 56,000 $ 0 $ 8,600 $ 56,000 $ 8,600 $ 66,000 Guaranteed by lessee Determine the following amounts at the beginning of the lease. Note: Round your intermediate and final answers to the nearest whole dollar amount. Situation 1 2 3 4 A. The lessor's: 1. Total lease payments $ 910,000 $ 910,000 $ 1,040,000 2. Gross investment in the lease 910,000 966,000 $1,040,000 1,048,600 1,106,000 3. Net investment in the lease 730,974 724,921 788,600 771,225 B. The lessee's: 4. Total lease payments 910,000 910,000 1,040,000 5. Right-of-use asset 730,974 6. Lease liability 730,974
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