Each of the four independent situations below describes a finance lease in which annual lease payments are
Question:
Each of the four 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.
Required:
For each situation, determine: a. The amount of the annual lease payments as calculated by the lessor. b. The amount the lessee would record as a right-of-use asset and a lease liability
Transcribed Image Text:
Situation 1 3 4 Lease term (years) 4 7 5 8 Lessor's rate of return 10% 11% 9% 12% $50,000 $350,000 $350,000 $75,000 $45,000 $465,000 $465,000 Fair value of lease asset Lessor's cost of lease asset $50,000 Residual value: $ 50,000 $ 7,000 $ 7,000 $ 45,000 $ 50,000 Estimated fair value Guaranteed fair value
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Related Book For
Intermediate Accounting
ISBN: 9781259722660
9th Edition
Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas
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