Question

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Each of the four Independent sltuations below describes a finance lease In which annual lease paymentsare 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, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1 (Use appropriate factor(s) from the tables provided.) Situation Lease term (years) Lessor s rate of return Fair value of lease asset 16% 11% 9% 12% $78,888 $378,888 $95,888 $485,e88 $78,888 $378,888 $65,888 $485,888 Lessor's cost of lease asset Residual value: Estimated fair value Guaranteed fair value 8 78,888 $27,880 39,888 0 $27,888 44,880 Required: a. & 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 llablity, for above situations. (Round your PV factor answers to 5 decimal places and other answer to nearest whole dollar.) -of-use Residual Value PV of Lease PV of Residual Payments Value Guarantee 20,075 S 84.292S 0S 70,000 0S 338,284 0 5 0 5 0,000 338 284 Situation 2S Situation 4

Answer 1

	Lease payments	Guaranteed RV	PV of LP	PV of RV	Right to use asset
situation 1	20075.41	0	70000	0	70,000
situation 2	70738.42	0	370000	0	370,000
situation 3	17895.64	27000	75872.5	19127.5	95,000
situation 4	83593.99	44000	465097	19903.4	485,000