Question
Required: a. & b. Determine the amount of the annual lease payments as calculated by the...
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) (Use appropriate factor(s) from the tables
provided.)
| Situation | ||||||||||||||||||
| 1 | 2 | 3 | 4 | |||||||||||||||
| Lease term (years) | 5 | 8 | 6 | 9 | ||||||||||||||
| Lessor's rate of return | 10 | % | 11 | % | 9 | % | 12 | % | ||||||||||
| Fair value of lease asset | $ | 67,000 | $ | 367,000 | $ | 92,000 | $ | 482,000 | ||||||||||
| Lessor's cost of lease asset | $ | 67,000 | $ | 367,000 | $ | 62,000 | $ | 482,000 | ||||||||||
| Residual value: | ||||||||||||||||||
| Estimated fair value | 0 | $ | 67,000 | $ | 24,000 | $ | 36,000 | |||||||||||
| Guaranteed fair value | 0 | 0 | $ | 24,000 | $ | 41,000 | ||||||||||||
|
Required:
What is situation 2?
Homework Answers
Answer #1
- Note = Dear student,You are ask for only situation-2 ,that'swhy i am solving ONLY situation-2
SOLUTION =
| Lease payments | Residual value guarantee | PV of lease payments | PV of residual value Guarantee | Right-of-use Asset / lease liability | |
| Situation- 2 | $59,159 | 0 | $340,927 | 0 | $340,927 |
- Step by step Explanation for your better understanding with formula
Situation 2-
Lease payments = (fair value – present value of residual value) / Present value of annuity due factor
Present value factor for n = 8 and i = 11% is 0.43393
PV of residual value = $67,000 
0.43393 = $29,073
Present value of annuity due factor for n = 8 and i=11% is 5.71220
Lease payments = (367000 - 29073 ) / 5.71220 = $59,159
Present value of lease payments = (fair value – present value of residual value)
= 367000- 26073 = $340,927
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