Each of the four independent situations below describes a sales-type lease in which annual lease payments...
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Each of the four independent situations below describes a sales-type lease in which annual lease payments of $14,000 are payable at the beginning of each year. Each is a finance lease for the lessee. Situation 1 2 3 4 Lease term (years) 3 3 3 4 Asset's useful life (years) 3 4 4 7 Lessor's implicit rate (known by lessee) 12% 12% 12% 12% Residual value: Guaranteed by lessee Unguaranteed $ 0 $ 0 $ 5,600 $ 2,800 $0 $ 0 $ 2,800 $ 5,600 Purchase option: After (years) none 2 3 3 Exercise price $ 7,800 $ 1,800 $ 3,800 Reasonably certain? no no yes Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Determine the following amounts at the beginning of the lease: Note: Round your final answers to nearest whole dollar. Answer is complete but not entirely correct. A. The lessor's: Situation 1 2 3 4 1. Total lease payments $ 42,000 47,600 x 44,800 x 45,800 2. Gross investment in the lease 42,000 47,600 47,600 45,800 3. Net investment in the lease 37,661 37,661 45,193 52,725 B. The lessee's: 4. Total lease payments 42,000 42,000 42,000 45,800 5. Right-of-use asset 37,661 37,661 45,193 52,725 6. Lease liability 37,661 37,661 45,193 x 52,725 Each of the four independent situations below describes a sales-type lease in which annual lease payments of $14,000 are payable at the beginning of each year. Each is a finance lease for the lessee. Situation 1 2 3 4 Lease term (years) 3 3 3 4 Asset's useful life (years) 3 4 4 7 Lessor's implicit rate (known by lessee) 12% 12% 12% 12% Residual value: Guaranteed by lessee Unguaranteed $ 0 $ 0 $ 5,600 $ 2,800 $0 $ 0 $ 2,800 $ 5,600 Purchase option: After (years) none 2 3 3 Exercise price $ 7,800 $ 1,800 $ 3,800 Reasonably certain? no no yes Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Determine the following amounts at the beginning of the lease: Note: Round your final answers to nearest whole dollar. Answer is complete but not entirely correct. A. The lessor's: Situation 1 2 3 4 1. Total lease payments $ 42,000 47,600 x 44,800 x 45,800 2. Gross investment in the lease 42,000 47,600 47,600 45,800 3. Net investment in the lease 37,661 37,661 45,193 52,725 B. The lessee's: 4. Total lease payments 42,000 42,000 42,000 45,800 5. Right-of-use asset 37,661 37,661 45,193 52,725 6. Lease liability 37,661 37,661 45,193 x 52,725
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Related Book For
Intermediate Accounting
ISBN: 978-1260481952
10th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas
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