Exercise 15-10 (Algo) Lessor calculation of annual lease payments; lessee calculation of asset and llability [LO15-2] 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. 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 return (known by lessee) Lessee's incremental borrowing rate Fair value of lease asset Situation 1 Situation 2 Situation 3 Lease Payments 10 10% 11% Right-of-use Asset/Lease Payable $680,000 Situation 20 9% $1,020,000 3 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. Note: Round your answers to the nearest whole dollar. 6 11% 10% $225,000
Exercise 15-10 (Algo) Lessor calculation of annual lease payments; lessee calculation of asset and llability [LO15-2] 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. 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 return (known by lessee) Lessee's incremental borrowing rate Fair value of lease asset Situation 1 Situation 2 Situation 3 Lease Payments 10 10% 11% Right-of-use Asset/Lease Payable $680,000 Situation 20 9% $1,020,000 3 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. Note: Round your answers to the nearest whole dollar. 6 11% 10% $225,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Exercise 15-10 (Algo) Lessor calculation of annual lease payments; lessee calculation of asset and
llability [LO15-2]
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.
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 return (known by lessee)
Lessee's incremental borrowing rate
Fair value of lease asset
Situation 1
Situation 2
Situation 3
1
Lease Payments
10
10%
11%
$680,000
Situation
2
20
8%
9%
$1,020,000
6
11%
18%
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.
Note: Round your answers to the nearest whole dollar.
Right-of-use Asset/Lease
Payable
$225,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd8d08640-7873-4596-af0f-d89b2f2920d1%2F827fde2d-5af2-4b87-a1b3-124ec87084e9%2Fse55qzn_processed.png&w=3840&q=75)
Transcribed Image Text:Exercise 15-10 (Algo) Lessor calculation of annual lease payments; lessee calculation of asset and
llability [LO15-2]
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.
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 return (known by lessee)
Lessee's incremental borrowing rate
Fair value of lease asset
Situation 1
Situation 2
Situation 3
1
Lease Payments
10
10%
11%
$680,000
Situation
2
20
8%
9%
$1,020,000
6
11%
18%
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.
Note: Round your answers to the nearest whole dollar.
Right-of-use Asset/Lease
Payable
$225,000
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