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 lessors 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.)
Situation
1 2 3 4
Lease term (years) 4 7 5 8
Lessor's rate of return 10 % 11 % 9 % 12 %
Fair value of lease asset $ 50,000 $ 350,000 $ 75,000 $ 465,000
Lessor's cost of lease asset $ 50,000 $ 350,000 $ 45,000 $ 465,000
Residual value:
Estimated fair value 0 $ 50,000 $ 7,000 $ 45,000
Guaranteed fair value 0 0 $ 7,000 $ 50,000
Situations 1-4
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 above situations. (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. (EV of $1. PV of $1. FVA of $1. PVA of $1. EVAD of S1 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 1 4 10% $50,000 $50,000 Situation 2 3 7 5 11% 9% $350,000 $75,000 $350,000 $45,000 8 12% $465,000 $465,000 0 0 $ 50,000 0 $ 7,000 $ 7,000 $ 45,000 $50,000 Situations 1-4 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 above situations. (Round your answers to the nearest whole dollar amount.) Lease Payments Residual Value Guarantee PV of Lease Payments PV of Residual Value Guarantee Right-of-use AssetLease Liability Situation 1 Situation 2 Situation 3 Situation
