Each of the four independent situations below describes a sales-type lease in which annual lease payments of $125,000 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) Lease term (years) Lessor's and lessee's interest rate Residual value: Estimated fair value Guaranteed by lessee A. The lessor's: 1. Total lease payments 2. Gross investment in the lease 3. Net investment in the lease B. The lessee's: 4. Total lease payments 5. Right-of-use asset 6. Lease liability 1 6 12% 2 $0 $0 Situation 2 Situation 3 6 10% $ 55,000 $0 Determine the following amounts at the beginning of the lease. Note: Round your intermediate and final answers to the nearest whole dollar amount. 3 7 10% $ 8,500 $ 8,500 4 7. 11% $ 55,000 $ 65,000
Each of the four independent situations below describes a sales-type lease in which annual lease payments of $125,000 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) Lease term (years) Lessor's and lessee's interest rate Residual value: Estimated fair value Guaranteed by lessee A. The lessor's: 1. Total lease payments 2. Gross investment in the lease 3. Net investment in the lease B. The lessee's: 4. Total lease payments 5. Right-of-use asset 6. Lease liability 1 6 12% 2 $0 $0 Situation 2 Situation 3 6 10% $ 55,000 $0 Determine the following amounts at the beginning of the lease. Note: Round your intermediate and final answers to the nearest whole dollar amount. 3 7 10% $ 8,500 $ 8,500 4 7. 11% $ 55,000 $ 65,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
s
Transcribed Image Text:Each of the four independent situations below describes a sales-type lease in which annual lease payments of $125,000 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)
Lease term (years)
Lessor's and lessee's interest rate
Residual value:
Estimated fair value
Guaranteed by lessee
A. The lessor's:
1. Total lease payments
2. Gross investment in the lease
3. Net investment in the lease
B. The lessee's:
4. Total lease payments
5. Right-of-use asset
6. Lease liability
1
6
12%
2
$0
$0
Situation
2
Situation
3
6
10%
$ 55,000
$0
Determine the following amounts at the beginning of the lease.
Note: Round your intermediate and final answers to the nearest whole dollar amount.
3
7
10%
$ 8,500
$ 8,500
4
7.
11%
$ 55,000
$ 65,000
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education