Question

Exercise 15-10 (Algo) Lessor calculation of annual lease payments; lessee calculation of asset and liability [LO15-2]

Each of the three independent situations below describes a
finance lease in which annual lease payments are payable at the
*end* 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 | |||

1 | 2 | 3 | |

Lease term (years) | 11 | 20 | 6 |

Lessor's rate of return (known by lessee) | 11% | 9% | 12% |

Lessee's incremental borrowing rate | 12% | 10% | 11% |

Fair value of lease asset | $790,000 | $1,075,000 | $280,000 |

**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 liability,
for each of the above situations. **(Round your answers to
the nearest whole dollar.)**

Answer #1

Ans:

Lease Payments | Right of Use of Assets/Lease Payable | |

Situation 1 | $ 127,285.91 | $ 790,000.00 |

Situation 2 | $ 117,763.05 | $ 1,075,000.00 |

Situation 3 | $ 68,103.32 | $ 280,000.00 |

Particulars | Situations | ||

1 | 2 | 3 | |

Fair value of leased assets (P) | $ 790,000 | $ 1,075,000 | $ 280,000 |

Rate of Return (r) | 11% | 9% | 12% |

Lease term (n) | 11 | 20 | 6 |

(Q) PVAD(r%,n) | 6.2065 | 9.1285 | 4.1114 |

Annual Lease payment (P/Q) | $ 127,285.91 | $ 117,763.05 | $ 68,103.32 |

Situations | |||

1 | 2 | 3 | |

1.Annual Lease Payments | $ 127,285.91 | $ 117,763.05 | $ 68,103.32 |

2.PVAD(r%,n) | 6.2065 | 9.1285 | 4.1114 |

3.Right of Use of Assets/Lease Payable(1*2) | $ 790,000.00 | $ 1,075,000.00 | $ 280,000.00 |

**Hope This Helped ! Let Me Know In Case of Any
Queries.**

Each of the three independent situations below describes a
finance lease in which annual lease payments are payable at the
end 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
1
2
3
Lease term (years)
10
15
5
Lessor's rate of return (known by lessee)
12%
10%...

Each of the three 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, 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
Lease term (years)
11
21
5
Lessor's rate of return (known by lessee)
10%
8%...

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 liability,
for each of the above situations. (Round your answers to
the nearest whole dollar amount.)
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)...

Exercise 15-6 (Algo) Finance lease; lessee [LO15-2]
Manufacturers Southern leased high-tech electronic equipment
from Edison Leasing on January 1, 2021. Edison purchased the
equipment from International Machines at a cost of $127,024. (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.)
Related Information:
Lease term
2 years (8 quarterly periods)
Quarterly rental payments
$17,000 at the beginning of each period
Economic life of...

Each of the four independent situations below describes a
sales-type lease in which annual lease payments of $160,000 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) 9 9 10 10 Lessor's
and lessee's interest rate 9% 11% 10%...

Each of the four independent situations below describes a
sales-type lease in which annual lease payments of $160,000 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) 9 9 10 10 Lessor's
and lessee's interest rate 9% 11% 10%...

For each of the three independent situations below determine the
amount of the annual lease payments. Each describes a finance lease
in which annual lease payments are payable at the beginning of each
year. Each lease agreement contains an option that permits the
lessee to acquire the leased asset at an option price that is
sufficiently lower than the expected fair value that the exercise
of the option appears reasonably certain. (FV of $1, PV of $1, FVA
of $1,...

Each of the 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 interest
rate.
Situation
1
2
Lease term
10
yrs
20
yrs
Lessor's desired
rate of return
12
%
14
%
Lessee's
incremental borrowing rate
14
%
12
%
Fair value of
asset
$
710,000
$
510,000
For convenience, here are some table values:
Periods; int.
rate
PV, ordinary annuity...

A lease agreement that qualifies as a finance lease calls for
annual lease payments of $50,000 over a four-year lease term (also
the asset’s useful life), with the first payment at January 1, the
beginning of the lease. The interest rate is 8%. (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.)
Required:
a. Complete the amortization schedule for the
first two payments....

A lease agreement that qualifies as a capital lease calls for
annual lease payments of $30,000 over a four-year lease term, with
the first payment at January 1, the lease’s inception. The interest
rate is 8% (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.)
Complete the amortization schedule for the first two
payments.
Date
Lease Payable
Interest Expense
Decrease in Balance...

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