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 beginning 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 $ Residual Value Guarantee 70,000 $ $ $ $ 70,000 $ 70,000 $ 4 108 0 $ 0 0 5,000 0 2 PV of Lease Payments $ 370,000 $ 370,000 Situation $ 70,000 0 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 amount. 70,000 7 118 $ $ $ 3 $ 95,000 $ 65,000 $ 27,000 $ 27,000 PV of Residual Value Guarantee 5 98 0 0 0 $ 8 12% $ 485,000 $ 485,000 $ 39,000 $ 44,000 Right-of-use Asset/Lease Liability 70,000
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 beginning 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 $ Residual Value Guarantee 70,000 $ $ $ $ 70,000 $ 70,000 $ 4 108 0 $ 0 0 5,000 0 2 PV of Lease Payments $ 370,000 $ 370,000 Situation $ 70,000 0 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 amount. 70,000 7 118 $ $ $ 3 $ 95,000 $ 65,000 $ 27,000 $ 27,000 PV of Residual Value Guarantee 5 98 0 0 0 $ 8 12% $ 485,000 $ 485,000 $ 39,000 $ 44,000 Right-of-use Asset/Lease Liability 70,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 beginning
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
S
Situation 1
Situation 2
Situation 3
Situation 4
X
3
Lease Payments
$
E
D
C
Residual Value
Guarantee
70,000 $
$
$
$
R
$ 70,000
$ 70,000
F
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 amount.
4
10%
0
5,000
5
0 $
0
0
0
PV of Lease
Payments
T
2
$ 370,000
$ 370,000
70,000
G
$ 70,000
0
< Prev
6
Situation
$
7
118
$
$
PV of Residual
Value Guarantee
B
3
$ 95,000
$ 65,000
$ 27,000
$ 27,000
5
9%
0
0
16 of 20
H
0
MacBook Air
$
4
N
$ 485,000
$ 485,000
8
12%
$ 39,000
$ 44,000
Right-of-use
Asset/Lease
Liability
J
70,000
Next >
M
K
O
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Transcribed Image Text:es
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11
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 beginning
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
S
Situation 1
Situation 2
Situation 3
Situation 4
X
3
Lease Payments
$
E
D
C
Residual Value
Guarantee
70,000 $
$
$
$
R
$ 70,000
$ 70,000
F
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 amount.
4
10%
0
5,000
5
0 $
0
0
0
PV of Lease
Payments
T
2
$ 370,000
$ 370,000
70,000
G
$ 70,000
0
< Prev
6
Situation
$
7
118
$
$
PV of Residual
Value Guarantee
B
3
$ 95,000
$ 65,000
$ 27,000
$ 27,000
5
9%
0
0
16 of 20
H
0
MacBook Air
$
4
N
$ 485,000
$ 485,000
8
12%
$ 39,000
$ 44,000
Right-of-use
Asset/Lease
Liability
J
70,000
Next >
M
K
O
P
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