Alpesh Three independent situations are given. Each describes a finance lease in which annual lease payments are payable at the beginningof each year. Each lease agreement contains an option that permits the lessee to acquire the leased asset at an option price that issufficiently lower than the expected fair value that the exercise of the option appears reasonably certain.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 $1)Situation2Lease term (years)Lessor's rate of return410%411%398Fair value of leased asset$ 72,000Lessor's cost of leased asset$ 56,000$ 426,000$ 426,000$ 191,000$ 151,000Purchase option:Exercise price$ 16,000$ 56,000$ 28,000Exercisable at end of year:442Reasonably certain?yesnoyesDetermine the annual lease payments for each situation:Note: Round your intermediate and final answers to the nearest whole dollar amount.Annual leasepaymentsSituation 1Situation 2Situation 3

We must compute the present value of the minimum lease payments at the start of each year in order…

Answered: Three independent situations are given.…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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) Situation 1 Lease term (years) Lessor's rate of return Fair value of lease asset $ 61,000 $361,000 $86,000 Lessor's cost of lease asset$ 61,000 $361,000 $ 56,000 Residual value: $61,000 Estimated fair value Guaranteed fair value 4 10% 3 0 0 4 7 11% 5 9% 8 12% $ 476,000 $ 476,000 $18,000 $ 30,000 0 $ 18,000 $ 35,000 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.
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) Situation 1 2 3 4 Lease term (years) Lessor's rate of return 4 10% 7 11% 5 8 9% 12% Fair value of lease asset $ 60,000 $ 360,000 $ 85,000 Lessor's cost of lease asset $ 60,000 $ 360,000 $ 55,000 $ 475,000 $ 475,000 Residual value: Estimated fair value Guaranteed fair value 0 $ 60,000 $ 17,000 $ 29,000 0 0 $ 17,000 $ 34,000 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. Lease Payments Residual Value PV of Lease Guarantee Payments PV of…
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) 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 $ 59,000 $ 359,000 $ 84,000 $ 474,000 Lessor's cost of lease asset $ 59,000 $ 359,000 $ 54,000 $ 474,000 Residual value: Estimated fair value 0 $ 59,000 $ 16,000 $ 32,000 Guaranteed fair value 0 0 $ 16,000 $ 37,000 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.
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) Situation 1 2 3 4 Lease term (years) Lessor's rate of return Fair value of lease asset 4 10% 7 11% 5 9% 8 12% $ 64,000 $ 364,000 $ 89,000 Lessor's cost of lease asset $ 64,000 $ 364,000 $ 59,000 $ 479,000 $ 479,000 Residual value: Estimated fair value 0 $ 64,000 $ 21,000 $ 33,000 Guaranteed fair value 0 0 $ 21,000 $ 38,000 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. Right-of-use Lease Payments Residual Value Guarantee PV of Lease…
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) 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 $ 65,000 $ 365,000 $ 90,000 $ 480,000 Lessor's cost of lease asset $ 65,000 $ 365,000 $ 60,000 $ 480,000 Residual value: Estimated fair value 0 $ 65,000 $ 22,000 $ 34,000 Guaranteed fair value 0 0 $ 22,000 $ 39,000 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. I have got all answers except…
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) Situation 1 2 3 4 Lease term (years) 5 8 6 9 Lessor's rate of return 9% 10% 8% 11% Fair value of lease asset $ 69,000 $ 369,000 $ 94,000 $ 484,000 Lessor's cost of lease asset $ 69,000 $ 369,000 $ 64,000 $ 484,000 Residual value: Estimated fair value 0 $ 69,000 $ 26,000 $ 38,000 Guaranteed fair value 0 0 $ 26,000 $ 43,000
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) Situation 1 2 3 4 Lease term (years) Lessor's rate of return 4 10% 7 11% 5 8 9% 12% Fair value of lease asset $ 56,000 $ 356,000 $ 81,000 $ 471,000 Lessor's cost of lease asset $ 56,000 $ 356,000 $ 51,000 $ 471,000 Residual value: Estimated fair value 0 $ 56,000 Guaranteed fair value 0 0 $ 13,000 $13,000 $ 51,000 $ 56,000 Required: a. & b. Determine the amount of the annual lease payments as calculated by the lessor and the amount the essee 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. Answer is complete but not entirely correct. Lease Payments Residual…
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) Situation 2 1 Lease term (years) Lessor's rate of return 10% 11% 9% 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 Guaranteed fair value 5 Situation 1 Situation 2 Situation 3 Situation 4 Lease Payments 3 0 4 8 6 9 0 $ 51,000 $8,000 $ 46,000 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. 12% a. & b.…
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. (EV of $1. PV of $1. EVA of S1, PVA of $1. EVAD 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 1 Lease Payments 6 10% $ 58,000 $ 58,000 e 0 2 Situation 9 11% $ 358,000 $ 358,000 $ 58,000 Residual Value PV of Lease Guarantee Payments 0 7 9% $ 83,000 $ 53,000 $ 15,000 $ 15,000 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. PV of…
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. (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 (known by lessee) Lessee's incremental borrowing rate Fair value of lease asset Situation 11 Situation 2 Situation 3 Lease Payments 10 11% 12% Right-of-use Asset/Lease Payable $780,000 Situation 20 9% 10% $1,150,000 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. 6 12% 11% $365,000
S 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) Situation 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 4 10% $ 64,000 $ 64,000 Residual Value Guarantee $ $ $ $ 1 0 0 0 5,000 0 0 2 7 11% $ 364,000 $ 364,000 $ 64,000 PV of Lease Payments 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. 3 5 9% $ 89,000 $ 59,000 $…
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 14,340 62,310 $ 16,590 × $ 79,947 1 4 10% $ 50,000 $50,000 0 0 0 $ $ $ 5,000 $ 0 2 $ 350,000 $ 350,000 Situation $ 50,000 0 PV of Lease Payments 7 11% 50,000 325,917 70,336 × $ 444,806 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…

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