Question

Each of the four independent situations below describes a sales-type lease in which annual lease payments of $17,000 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 $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Situation 1 2 3 4 Lease term (years) 2 2 2 2 Asset’s useful life (years) 2 3 3 5 Lessor’s implicit rate (known by lessee) 9 % 9 % 9 % 9 % Residual value: Guaranteed by lessee 0 $ 6,800 $ 3,400 0 Unguaranteed 0 0 $ 3,400 $ 6,800 Purchase option: After (years) none 1 2 3 Exercise price n/a $ 8,400 $ 2,400 $ 4,400 Reasonably certain? n/a no no yes Determine the following amounts at the beginning of the lease: (Round your final answers to nearest whole dollar.)

Each of the four independent situations below describes a sales-type lease in which annual lease payments of $17,000 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 $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) 1 2. 2 9% Situation 2 3 2 2. 3 3 9% 9% 4 2 5 9% Lease term (years) Asset's useful life (years) Lessor's implicit rate (known by lessee) Residual value: Guaranteed by lessee Unguaranteed Purchase option: After (years) Exercise price Reasonably certain? 0 0 $6,800 0 $3,400 $3,400 0 $6,800 none n/a n/a 1 $ 8,400 no 2 $2,400 no 3 $4,400 yes Determine the following amounts at the beginning of the lease: (Round your final answers to nearest whole dollar.) Situation 1 2 3 4 A. The lessor's: 1. Total lease payments 2. Gross investment in the lease 3. Net investment in the lease B. The lessee's: 4. Total lease payments 5. Right-of-use asset 6. Lease liability

Answer 1

Calculations Lease Payments Annual Coufayx No. of years lt Uwianked boy lesse Situation i $ 17,000 X 2 = $346000 Situation 2 4-17000X2) + 6,800 = $ 49,800 Situation 3 = ($17,000x2)+3.400 & 37,400 Situation 4 = 417,000 Y3) + 44400 55,400 Goobs_Inrestment in the lease = lease Pay Estimak Javí Volut Situation 344000 Gwounteed Situation 2 - 40,800 Sikuahon 3 374400+ 3400 401:00 Situation 4 = 53540076800 62,200 - Net Investment in the lease = Pranwuries + PV estimated & Pu Gurantee Situation - 17.000 4 1.92 324640 by lessee Pv of annuity due $4, n=g, r= 9% = 1.92 Situation 2 (17 pou X1192+68.00x 0.84 ) 38,352) Present Value of & Lin=2 is_91% = 0.84 Situation 3_ [17,0008 1.93) +(goo x 0.84 )= 38,352 Present Value & 4, n=2 19% = 0.84 Situation 4 = (1700 X 2016) + (112100X 0.13 ) = 55,095 6800 14400) Present Value of annuity due be'z9t7 h=3-0.75 Present Value of $4, n=3, e-9% = 0.73 Righ of use anets Situation 327640 Situation 2 384352 Schahion 3 El 17010 X1-92) +(3400X 0.84) 35,496 Simakten 4 = (lovo X276)+(4,400 X 0-13) 509132 - DELTA Notebook

Situations 2 3 4 A. The lesson's & 1. Total lease Payment 34000 2 You aunt in lease 34.000 3. Net Invot.in Lease 40.800 40.800 38352 37,400 40800 38352 SsYou 62,200 55,096 327640 B. The lessee's a 4. 7obal lease payments 5. Right of use asett 6. Leese Liebling 344000 32,640 32,640 40,800 38,352 38,352 37,400 35,496 35,496 55,400 50,132 59,132