Question

Each of the four independent situations below describes a sales-type lease in which annual lease payments of $12,000 are paya

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Answer #1
Requirement A - The lessor's
Situation
Paticulars 1 2 3 4
Lease Payments 60000 64800 62400 60000
Gross Investment in the Lease 60000 64800 64800 64800
Net Investment in the Lease 50877 53996 53996 53996
Notes:
Lease Payments=(Annual Lease Payments*No. of Year) + Guaranteed by Lessee
Gross Investment in Lease=Lease Payments+Estimated Fair value+Guranteed by Lessee
Net Investment In Lease = PV of annuties + PV of Estimated Fair Value + PV of Guaranteed
Requirement B - The lessee's
Situation
Paticulars 1 2 3 4
Lease Payments 60000 64800 62400 60000
Right of use of asset 50877 53996 52436 50877
Lease liability 50877 53996 52436 50877
Notes:
Lease Payments=(Annual Lease Payments*No. of Year) + Guaranteed by Lessee
Right of use of Asset = Lease Liability = PV of annuties + PV of Guaranteed by Lessee
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