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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. (EV 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 Lessee's incremental borrowing rate Fair value of lease asset Lease Payments Right-of-use Asset/Lease 1 12 Payable Situation 2 15 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 above situations. (Round your answers to nearest whole dollar.) 10% 8% 9% 11% $800,000 $1,080,000 3 4 11% 10% $285,000

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. (EV 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 Lessee's incremental borrowing rate Fair value of lease asset Lease Payments Right-of-use Asset/Lease 1 12 Payable Situation 2 15 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 above situations. (Round your answers to nearest whole dollar.) 10% 8% 9% 11% $800,000 $1,080,000 3 4 11% 10% $285,000

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 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. (EV of $1. PV of $1. FVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Lease term (years) Lessor's rate of return Lessee's incremental borrowing rate Fair value of lease asset Situation 11 Situation 2 Situation 3 1 12 10% 11% Payable Situation 2 15 3 4 11% 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 above situations. (Round your answers to nearest whole dollar.) Lease Payments Right-of-use Asset/Lease 8% 9% 10% $800,000 $1,080,000 $285,000
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. (EV of $1. PV of $1. FVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Lease term (years) Lessor's rate of return Lessee's incremental borrowing rate Fair value of lease asset Situation 11 Situation 2 Situation 3 1 12 10% 11% Payable Situation 2 15 3 4 11% 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 above situations. (Round your answers to nearest whole dollar.) Lease Payments Right-of-use Asset/Lease 8% 9% 10% $800,000 $1,080,000 $285,000
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