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.
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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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 S1, PV of $1, FVA of S1, PVA of $1,
FVAD of $1 and PVAD of S1) Situation 1 2 3 4 Lease term (years) 5 8 6 9 Lessor's rate of return
10% 11% 9% 12% Fair value of lease asset $ 51,000 $ 351,000 $ 76,000 $ 466,000 Lessor's cost of
lease asset $ 51,000 $ 351,000 $ 46,000 $ 466,000 Residual value: Estimated fair value 0 $ 51,000 $
8,000 $ 46,000 Guaranteed fair value 0 0 $ 8,000 $ 51,000 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.
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