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. Lease Payments Right-of-use Asset/Lease Payable Situation 1 Situation 2 Situation 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. Lease Payments Right-of-use Asset/Lease Payable Situation 1 Situation 2 Situation 3
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Each of the three 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. (EV of $1. PV of $1, FVA of $1, PVA of $1. EVAD 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
Required:
Situation
2
3
15
11%
25
6
9%
12%
12%
10%
11%
$680,000
$1,060,000
$265,000
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.
Lease Payments
Right-of-use Asset/Lease
Payable
Situation 1
Situation 2
Situation 3
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