Chapter 18, Problem 18.13BE

Finance Lease, Lessee, Lessor, Unguaranteed Residual Value. Sun Bank recently leased machinery to Claude Company. The 8-year lease contract requires rental payments of $100,000 due on January 1 of each year, The lease is classified as a finance lease for the lessee and a sales-type lease for the lessor. Claude knows Sun Bank's 6% implicit rate. There is a $30,000 residual value. Compute the net investment in the lease for Sun Bank and the lease liability and right-of-use asset for the Claude Company assuming that the residual value is not guaranteed by the lessee or by a third party.