Each of the four independent situations below describes a sales-type lease in which annual lease payments...

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Accounting

Each of the four independent situations below describes asales-type lease in which annual lease payments of $100,000 arepayable at the beginning of each year. Each is a finance lease forthe lessee. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1and PVAD of $1) (Use appropriate factor(s) from the tablesprovided.)
Situation
1 2 3 4
Lease term (years) 7 7 8 8
Lessor's and lessee's interest rate 9% 11% 10% 12%
Residual value:
Estimated fair value 0 $50,000 $8,000 $50,000
Guaranteed by lessee 0 0 $8,000 $60,000
Determine the following amounts at the beginning of the lease.(Round your intermediate and final answers to the nearestwhole dollar amount.)
Situation
1 2 3 4
A. The Lesser's
1. Lease payment
2. Gross investment in the Lease
3. Net Investment in the Lease
B. The Lessee's
1. Lease payment
2. Gross investment in the Lease
3. Net investment in the Lease

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4.4 Ratings (943 Votes)

Situation 1 A The lessors 1 Minimum lease payments 100000 x 7 700000 2 Gross investment in the lease 100000 x 7 700000 3 Net investment in the lease 100000 x PVAD97 100000 x 548592 548592 B The lessees 1 Minimum lease payments 100000 x 7 770000 2 Rightofuse asset 100000 x PVAD97 100000 x 548592 See Answer

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	Situation
	1	2	3	4
Lease term (years)	7	7	8	8
Lessor's and lessee's interest rate	9%	11%	10%	12%
Residual value:
Estimated fair value	0	$50,000	$8,000	$50,000
Guaranteed by lessee	0	0	$8,000	$60,000

	Situation
		1	2	3	4
A.	The Lesser's
	1. Lease payment
	2. Gross investment in the Lease
	3. Net Investment in the Lease
B.	The Lessee's
	1. Lease payment
	2. Gross investment in the Lease
	3. Net investment in the Lease