Each of the four independent situations below describes a sales-type lease in which annual lease payments of $17,000 are payable 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, EVAD of $1 and PVÁD of $1) (Use appropriate factor(s) from the tables provided.) Situation 3 4. 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 2 3 9% 5 9% 9% 9% $ 3,400 $ 3,400 $ 6,800 $ 6,800 none 1. 2 n/a n/a $ 8,400 $ 2,400 $ 4,400 Reasonably certain? no no yes Determine the following amounts at the beginning of the lease: (Round your final answers to nearest whole dollar.)

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Determine the following amounts at the beginning of the lease: (Round your final answers to nearest whole dollar.)

**Lease Situations Overview**

This task outlines the parameters for four independent situations involving a sales-type lease with annual payments. Each case is a finance lease where $17,000 is payable at the beginning of each year. Use the appropriate factors from the financial tables provided to analyze each situation:

### Lease Details by Situation:

#### Situation 1
- **Lease term (years):** 2
- **Asset’s useful life (years):** 2
- **Lessor’s implicit rate:** 9%
- **Residual value:**
  - Guaranteed by lessee: $0
  - Unguaranteed: $0
- **Purchase option:** None

#### Situation 2
- **Lease term (years):** 2
- **Asset’s useful life (years):** 3
- **Lessor’s implicit rate:** 9%
- **Residual value:**
  - Guaranteed by lessee: $6,800
  - Unguaranteed: $0
- **Purchase option:**
  - After 1 year
  - Exercise price: $8,400
  - Reasonably certain: No

#### Situation 3
- **Lease term (years):** 2
- **Asset’s useful life (years):** 3
- **Lessor’s implicit rate:** 9%
- **Residual value:**
  - Guaranteed by lessee: $3,400
  - Unguaranteed: $3,400
- **Purchase option:**
  - After 2 years
  - Exercise price: $2,400
  - Reasonably certain: No

#### Situation 4
- **Lease term (years):** 2
- **Asset’s useful life (years):** 5
- **Lessor’s implicit rate:** 9%
- **Residual value:**
  - Guaranteed by lessee: $0
  - Unguaranteed: $6,800
- **Purchase option:**
  - After 3 years
  - Exercise price: $4,400
  - Reasonably certain: Yes

### Required Calculations:

**Determine the following amounts at the beginning of the lease (rounded to the nearest whole dollar):**

- **A. Lessor's:**
  1. Total lease payments
  2. Gross investment in the lease
  3. Net investment in the lease

- **
Transcribed Image Text:**Lease Situations Overview** This task outlines the parameters for four independent situations involving a sales-type lease with annual payments. Each case is a finance lease where $17,000 is payable at the beginning of each year. Use the appropriate factors from the financial tables provided to analyze each situation: ### Lease Details by Situation: #### Situation 1 - **Lease term (years):** 2 - **Asset’s useful life (years):** 2 - **Lessor’s implicit rate:** 9% - **Residual value:** - Guaranteed by lessee: $0 - Unguaranteed: $0 - **Purchase option:** None #### Situation 2 - **Lease term (years):** 2 - **Asset’s useful life (years):** 3 - **Lessor’s implicit rate:** 9% - **Residual value:** - Guaranteed by lessee: $6,800 - Unguaranteed: $0 - **Purchase option:** - After 1 year - Exercise price: $8,400 - Reasonably certain: No #### Situation 3 - **Lease term (years):** 2 - **Asset’s useful life (years):** 3 - **Lessor’s implicit rate:** 9% - **Residual value:** - Guaranteed by lessee: $3,400 - Unguaranteed: $3,400 - **Purchase option:** - After 2 years - Exercise price: $2,400 - Reasonably certain: No #### Situation 4 - **Lease term (years):** 2 - **Asset’s useful life (years):** 5 - **Lessor’s implicit rate:** 9% - **Residual value:** - Guaranteed by lessee: $0 - Unguaranteed: $6,800 - **Purchase option:** - After 3 years - Exercise price: $4,400 - Reasonably certain: Yes ### Required Calculations: **Determine the following amounts at the beginning of the lease (rounded to the nearest whole dollar):** - **A. Lessor's:** 1. Total lease payments 2. Gross investment in the lease 3. Net investment in the lease - **
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