Each of the four independent situations below describes a finance lease in which annual lease payments are payable at the beginningof each year. The lessee is aware of the lessor's implicit rate of return.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 rate of returnFair value of lease assetLessor's cost of lease assetResidual value:Estimated fair valueGuaranteed fair valueSituation 1Situation 2Situation 3Situation 4Lease Payments$116,274 $$$59%$ 69,000$ 69,000000 $00Residual Value PV of LeaseGuaranteePayments2Situation$ 369,000$ 369,000$ 69,000069,000810%3Required:a. & b. Determine the amount of the annual lease payments as calculated by the lessor and the amount the lessee would record as aright-of-use asset and a lease liability, for each of the above situations.Note: Round your answers to the nearest whole dollar amount.$$$$ 94,000$ 64,00068%$ 26,000$ 26,000PV of ResidualValue Guarantee0004$911%$ 484,000$ 484,000$ 38,000$ 43,000Right-of-useAsset/LeaseLiability69,000

Lease is an agreement between two parties to rent an asset at an agreed consideration for a…

erm (years) s rate of return Lue of lease asset 5 cost of lease asset l value: ated fair value teed fair value 5 9% $ 69,000 $ 69,000 0 0 2 Situation 8 10% $ 369,000 $ 369,000 $ 69,000 0 3 6 8% $ 94,000 $ 64,000 9 11% $ 484,000 $ 484,000 $ 26,000 $ 38,000 $ 26,000 $ 43,000 ermine the amount of the annual lease payments as calculated by the lessor and the amount t e asset and a lease liability, for each of the above situations. nd your answers to the nearest whole dollar amount.

erm (years) s rate of return Lue of lease asset 5 cost of lease asset l value: ated fair value teed fair value 5 9% $ 69,000 $ 69,000 0 0 2 Situation 8 10% $ 369,000 $ 369,000 $ 69,000 0 3 6 8% $ 94,000 $ 64,000 9 11% $ 484,000 $ 484,000 $ 26,000 $ 38,000 $ 26,000 $ 43,000 ermine the amount of the annual lease payments as calculated by the lessor and the amount t e asset and a lease liability, for each of the above situations. nd your answers to the nearest whole dollar amount.

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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