Chapter 15, Problem 15.10E

Lessor calculation of annual lease payments; lessee calculation of asset and liability

• LO15–2

(Note: This is a variation of E 15-9 modified to assume lease payments are at the end of each period.)

Each of the three independent situations below describes a finance lease in which annual lease payments are payable at the end of each year. The lessee is aware of the lessor’s implicit rate of return.

Required:

For each situation, determine:

1. a. The amount of the annual lease payments as calculated by the lessor.
2. b. The amount the lessee would record as a right-of-use asset and a lease liability.