Question

Check my work Each of the four independent situations below describes a sales-type lease in which annual lease payments of $16,500 are payable at the beginning of each year. Each is a finance lease for the lessee. (FV of $1. PV of $1. FVA of $1. PVA of $1. FVAD of S1 and PVAD of $1 (Use appropriate factor(s) from the tables provided.) Situation 2 3 5 5 6 6 128 120 1 5 5 128 5 120 Lease tern (years) Asset's useful life (years) Lessor's implicit rate (known by lessee) Residual values Guaranteed by lessee Unguaranteed Purchase option: After (years) Exercise price Reasonably certain? 0 0 $6,600 0 $3,300 $3,300 0 $6,600 none $8,300 5 $2,300 no $ 4,300 yes n/a Determine the following amounts at the beginning of the lease: (Round your final answers to nearest whole dollar.) Situation 2 3 $ 82,500 82.500 82,500 89.100 A. The lessor's: 1. Total lease payments 2. Gross investment in the loase 3. Net investment in the lease B. The lessee's 82,500 89,100 < Prey 24 of 24 !!! Next MacBook SS 4 FS $ 4 9 5 # 3 8 7 9 6 Р O U T R E Y т J L к H F G

Answer 1

Rate	12%	1+12% = 1.12
Year	PV factor	Remarks	Cummulative PV factor
0	1.00000		1.00000
1	0.89286	= 1 /1.12	1.89286
2	0.79719	= 0.89286 /1.12	2.69005
3	0.71178	= 0.79719 /1.12	3.40183
4	0.63552	= 0.71178 /1.12	4.03735
5	0.56743	= 0.63552 /1.12	4.60478
Total (0 to 4)	4.03735

XIA 5 2020-09(3) SEP.xlsx - Microsoft Excel ? X FILE HOME INSERT PAGE LAYOUT FORMULAS DATA REVIEW VIEW DEVELOPER Sign in H26 X for F K M G H 1 2 0.79719 = 0.892861 3 0.71178 = 0.79719 4 0.63552 = 0.71178 5 0.56743 = 0.63552 Total (0 to 4 4.03735 2.69005 3.40183 4.03735 4.60478 А B E 19 Lessor's information Situation 1 Situation 2 Situation 3 Situation 4 20 Lease term does not exceeds the excisable year of BPO. 21 Lease term 5 5 5 5 22 Excisable at end of year (if Purchase option reasonably certain = Yes) 3 23 Applicable lease term 5 5 5 3 24 25 Annual Lease payments $ 16,500 $ 16,500 $ 16,500 $ 16,500 26 Multiply: Applicable lease term 5 5 5 3 27 Total payments from annual lease payments $ 82,500 $ 82,500 $ 82,500 $ 49,500 28 Add: Exercise price (if Reasonably certain = Yes) $ 4,300 29 Lessor's Lease payments $ 82,500 $ 82,500 $ 82,500 $ 53,800 30 31 Lessor's Lease payments $ 82,500 $ 82,500 $ 82,500 $ 53,800 32 Guaranteed residual value (if Purchase option reasonably certain = NO) $ $ 6,600 $ 3,300 33 Unguaranteed residual value (if Purchase option reasonably certain = NO) $ $ $ 3,300 34 Gross investment in the lease $ 82,500 $ 89,100 $ 89,100 $ 53,800 35 36 Applicable lease term 5 5 5 3 37 Annual Lease payments $ 16,500 $ 16,500 $ 16,500 $ 16,500 38 Multiply: PV due annuity factor 4.03735 4.03735 4.03735 2.69005 39 Present value of annual lease payments $ 66,616 $ 66,616 $ 66,616 $ 44,386 40 41 Exercise price (if Reasonably certain = Yes) $ 4,300 42 Multiply: PV factor 0.71178 43 Present value of exercise price $ 3,061 44 45 Guaranteed residual value (if Purchase option reasonably certain = NO) $ $ 6,600 $ 3,300 46 Multiplv: PV factor 0.56743 0.56743 0.56743 ... Sheet12 Sheet13 Sheet14 Sheet15 Sheet16 Sheet17 Sheet18 Sheet19 Sheet20 + READY Activate Windows Go to Settings to activate Windows. 1 + 3 1 + 100% 02:22 i Search the web and Windows 0 ENG US 25-09-20

XIA 5 2020-09(3) SEP.xlsx - Microsoft Excel ? X FILE HOME INSERT PAGE LAYOUT FORMULAS DATA REVIEW VIEW DEVELOPER Sign in H67 X F H 1 J K M А B с D E 41 Exercise price (if Reasonably certain = Yes) $ $ 4,300 42 Multiply: PV factor 0.71178 43 Present value of exercise price $ 3,061 44 45 Guaranteed residual value (if Purchase option reasonably certain = NO) $ $ 6,600 $ 3,300 46 Multiply: PV factor 0.56743 0.56743 0.56743 47 Present value of guaranteed residual value $ $ 3,745 $ 1,873 48 49 Unguaranteed residual value (if Purchase option reasonably certain = NO) $ $ $ 3,300 50 Multiply: PV factor 0.56743 0.56743 0.56743 51 Present value of unguaranteed residual value $ $ $ 1,873 52 53 Present value of annual lease payments $ 66,616 $ 66,616 $ 66,616 $ 44,386 54 Present value of exercise price $ 3,061 55 Present value of guaranteed residual value $ $ 3,745 $ 1,873 56 Present value of unguaranteed residual value $ $ $ 1,873 57 Net investment in the lease $ 66,616 $ 70,361 $ 70,361 $ 47,446 58 59 Lessee's information Situation 1 Situation 2 Situation 3 Situation 4 60 Total payments from annual lease payments $ 82,500 $ 82,500 $ 82,500 $ 49,500 61 Add: Excess guaranteed residual value (purchase option) $ 4,300 62 Lessee's Lease payments $ 82,500 $ 82,500 $ 82,500 $ 53,800 63 64 Present value of annual lease payments $ 66,616 $ 66,616 $ 66,616 $ 44,386 65 Present value of exercise price $ 3,061 66 Right-of-use asset $ 66,616 $ 66,616 $ 66,616 $ 47,446 67 Lease payable (Similar to Right-of-use asset) $ 66,616 $ 66,616 $ 66,616 $ 47,446 68 Sheet12 Sheet13 Sheet14 Sheet15 Sheet16 Sheet17 Sheet18 Sheet19 Sheet20 READY Activate Windows Go to Settings to activate Windows. 3 1 + 100% i Search the web and Windows O ENG US 02:22 25-09-20