Question

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. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Situation 113 Lease ter (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 $ 65,000 $ 65,000 $365,000 $365,000 $90,000 $60,000 12% $480,000 $480,000 $ 65,000 $22,000 $ 22,000 $34, eee $ 39,800 Required: 2. & 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.) Lease Payments Desidual Value Guarantee PV of Lease Payments PV of Residual Value Guarantee Right-of-use Asset/Lease ability Situation 1 Situation 2 Situation 3 Situation 4 LI

Answer 1

	Lease payment	Residual value guarantee	PV of Lease payement	PV of Residual value Guarantee	Right of use Asset/Lease liablity
Suituation 1	$           13,000	$                     -	$       89,640	$               40,360	$            24,640
Suituation 2	$           37,500	$                     -	$    3,51,363	$            1,58,383	$           -13,637
Suituation 3	$           11,333	$                     -	$    1,04,504	$            1,52,354	$            14,504
Suituation 4	$        5,29,556	$               5,000	$ 45,52,532	$          19,38,730	$        -2,47,468