Exercise 15-24 (Algo) Calculation of annual lease payments; residual value [LO15-2, 15-6] Each of the four independent situations below describes a finance lease in which annual lease payments are payable at the begin 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 Fair value of lease asset Lessor's cost of lease asset Residual value: Estimated fair value Guaranteed fair value 1 6 9% $ 68,000 $ 68,000 0 0 2 Situation 9 10% $368,000 $368,000 $ 68,000 0 3 7 8% $93,000 $ 63,000 $ 25,000 $ 25,000 4 10 11% $ 483,000 $ 483,000 $ 37,000 $ 42,000 Required: a. & b. Determine the amount of the annual lease payments as calculated by the lessor and the amount the lessee would record right-of-use asset and a lease liability, for each of the above situations. Note: Round your answers to the nearest whole dollar amount.
Exercise 15-24 (Algo) Calculation of annual lease payments; residual value [LO15-2, 15-6] Each of the four independent situations below describes a finance lease in which annual lease payments are payable at the begin 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 Fair value of lease asset Lessor's cost of lease asset Residual value: Estimated fair value Guaranteed fair value 1 6 9% $ 68,000 $ 68,000 0 0 2 Situation 9 10% $368,000 $368,000 $ 68,000 0 3 7 8% $93,000 $ 63,000 $ 25,000 $ 25,000 4 10 11% $ 483,000 $ 483,000 $ 37,000 $ 42,000 Required: a. & b. Determine the amount of the annual lease payments as calculated by the lessor and the amount the lessee would record right-of-use asset and a lease liability, for each of the above situations. Note: Round your answers to the nearest whole dollar amount.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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![Exercise 15-24 (Algo) Calculation of annual lease payments; residual value [LO15-2, 15-6]
Each of the four independent situations below describes a finance lease in which annual lease payments are payable at the begin
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
Fair value of lease asset
Lessor's cost of lease asset
Residual value:
Estimated fair value.
Guaranteed fair value
Situation 1
Situation 2
Situation 3
Situation 4
Lease Payments
$
$
13,907
2,404,814
1
$
$
$
6
9%
$ 68,000
$ 68,000
0
0 $
0
0
2
Residual Value PV of Lease
Guarantee Payments
Situation
$368,000
$368,000
9
10%
$ 68,000
0
68,000 $
339,161 $
$
3
Required:
a. & b. Determine the amount of the annual lease payments as calculated by the lessor and the amount the lessee would record a
right-of-use asset and a lease liability, for each of the above situations.
Note: Round your answers to the nearest whole dollar amount.
$ 93,000
$ 63,000
7
8%
$ 25,000
$ 25,000
PV of Residual
Value Guarantee
0
0
0
4
$
$
$
$
10
11%
$ 483,000
$ 483,000
$ 37,000
$ 42,000
Right-of-use
Asset/Lease
Liability
68,000
339,161
93,000
483,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F732315a9-27e8-4e50-86f2-0e95d1020bc3%2Fbe9cb1f8-b574-4c57-91a7-6d0db6e449c3%2Fulagghb_processed.png&w=3840&q=75)
Transcribed Image Text:Exercise 15-24 (Algo) Calculation of annual lease payments; residual value [LO15-2, 15-6]
Each of the four independent situations below describes a finance lease in which annual lease payments are payable at the begin
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
Fair value of lease asset
Lessor's cost of lease asset
Residual value:
Estimated fair value.
Guaranteed fair value
Situation 1
Situation 2
Situation 3
Situation 4
Lease Payments
$
$
13,907
2,404,814
1
$
$
$
6
9%
$ 68,000
$ 68,000
0
0 $
0
0
2
Residual Value PV of Lease
Guarantee Payments
Situation
$368,000
$368,000
9
10%
$ 68,000
0
68,000 $
339,161 $
$
3
Required:
a. & b. Determine the amount of the annual lease payments as calculated by the lessor and the amount the lessee would record a
right-of-use asset and a lease liability, for each of the above situations.
Note: Round your answers to the nearest whole dollar amount.
$ 93,000
$ 63,000
7
8%
$ 25,000
$ 25,000
PV of Residual
Value Guarantee
0
0
0
4
$
$
$
$
10
11%
$ 483,000
$ 483,000
$ 37,000
$ 42,000
Right-of-use
Asset/Lease
Liability
68,000
339,161
93,000
483,000
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