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 $ 14,149 1 Residual Value Guarantee $ $ $59,000 $59,000 5 10% 0 0 0 $ 0 2 PV of Lease Payments Situation 8 118 $ 59,000 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. (Round your answers to the nearest whole dollar amount.) $359,000 $84,000 $359,000 $54,000 59,000 3 6 9% $ $ PV of Residual Value Guarantee 4 $16,000 $ 32,000 $16,000 $ 37,000 0 0 9 128 $474,000 $474,000 $ $ $ $ Right-of-use Asset/Lease Liability 59,000 0 0 0

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 $ 14,149 1 Residual Value Guarantee $ $ $59,000 $59,000 5 10% 0 0 0 $ 0 2 PV of Lease Payments Situation 8 118 $ 59,000 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. (Round your answers to the nearest whole dollar amount.) $359,000 $84,000 $359,000 $54,000 59,000 3 6 9% $ $ PV of Residual Value Guarantee 4 $16,000 $ 32,000 $16,000 $ 37,000 0 0 9 128 $474,000 $474,000 $ $ $ $ Right-of-use Asset/Lease Liability 59,000 0 0 0

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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