Each of the three independent situations below describes a finance lease in which annual lease payments are payable at the end of each year. The lessee is aware of the lessor's implicit rate of return. (FV of $1, PV of $1. FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Lease term (years) Lessor's rate of return (known by lessee) Lessee's incremental borrowing rate Fair value of lease asset Situation 1 Situation 2 Situation 3 Answer is not complete. Right-of-use Asset/Lease Payable Lease Payments $ 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. (Round your answers to the nearest whole dollar.) 144,513 1 9 12% 10% $770,000 85,177 situation 2 20 10% 11% $1,065,000 4 10% 9% $270,000
Each of the three independent situations below describes a finance lease in which annual lease payments are payable at the end of each year. The lessee is aware of the lessor's implicit rate of return. (FV of $1, PV of $1. FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Lease term (years) Lessor's rate of return (known by lessee) Lessee's incremental borrowing rate Fair value of lease asset Situation 1 Situation 2 Situation 3 Answer is not complete. Right-of-use Asset/Lease Payable Lease Payments $ 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. (Round your answers to the nearest whole dollar.) 144,513 1 9 12% 10% $770,000 85,177 situation 2 20 10% 11% $1,065,000 4 10% 9% $270,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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
Transcribed Image Text:Each of the three independent situations below describes a finance lease in which annual lease payments are payable at the end of
each year. The lessee is aware of the lessor's implicit rate of return. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of
$1) (Use appropriate factor(s) from the tables provided.)
Lease term (years)
Lessor's rate of return (known by lessee)
Lessee's incremental borrowing rate
Fair value of lease asset
Situation 1
Situation 2
Situation 3
Answer is not complete.
Right-of-use
Asset/Lease Payable
Lease
Payments
$
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. (Round your answers to the nearest whole dollar.)
144,513
1
9
85,177
12%
10%
$770,000
Situation
2
20
10%
11%
$1,065,000
4
10%
9%
$270,000
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