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. (Round your answers to the nearest whole dollar amount.)
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. (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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Question
a7
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. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of
$1) (Use appropriate factor(s) from the tables provided.)
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
1
12,107 S
54,559 $
13,634
6
10%
$58,000
$58,000
0
0
o s
0
2
Situation
PV of Lease
Payments
9
11%
$358,000
$358,000
$ 58,000
0
3
7
9%
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. (Round your answers to the nearest whole dollar amount.)
58,000 $
$
$83,000
$53,000
$15,000
$15,000
PV of Residual
Value Guarantee
$473,000
$473,000
4
$ 30,000
$ 35,000
ls
0
$
10
12%
$
$
10
Right-of-use
Asset/Lease
Liability
58,000
0
0
0
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