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Fitbit Ltd has leased a machine on the following terms: Date of entering lease 1 July...

Fitbit Ltd has leased a machine on the following terms: Date of entering lease 1 July 2019 Duration of lease 5 years Life of asset 6 years Unguaranteed residual value $40,000 Lease payments inception (at the start) $60,000 Annual payments (5) $65,000 Implied rate 11.0 % Required: Determine the Fair Value (rounded off) of the leased asset.

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Answer #1
Answer
Fair Value of the leased asset
Year Lease Payments Dis Factor PV
0 $               60,000 1 $     60,000
1--5 $               65,000 3.696 $   240,240
5 $               40,000 0.593 $     23,720
NPV $   323,960
( Fair Value of leased assets
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