For each of the three independent situations below determine the amount of the annual lease payments....
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For each of the three independent situations below determine the amount of the annual lease payments. Each describes 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, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Lease term (years) Lessor's rate of return Fair value of leased asset Lessor's cost of leased asset Purchase option: Exercise price Exercisable at end of year: Reasonably certain? Situation 1 Situation 2 Situation 3 1 5 12% S S S 60,894 13,456 ✔ 95,145 X $60,000 $50,000 > Answer is complete but not entirely correct. Annual Lease Payments $10,000 5 yes Situation 2 5 11% $ 420,000 $ 420,000 $ 50,000 5 no 3 Determine the annual lease payments for each situation: (Round your intermediate and final answers to the nearest whole dollar amount.) 4 9% $185,000 $145,000 $ 22,000 3 yes For each of the three independent situations below determine the amount of the annual lease payments. Each describes 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, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Lease term (years) Lessor's rate of return Fair value of leased asset Lessor's cost of leased asset Purchase option: Exercise price Exercisable at end of year: Reasonably certain? Situation 1 Situation 2 Situation 3 1 5 12% S S S 60,894 13,456 ✔ 95,145 X $60,000 $50,000 > Answer is complete but not entirely correct. Annual Lease Payments $10,000 5 yes Situation 2 5 11% $ 420,000 $ 420,000 $ 50,000 5 no 3 Determine the annual lease payments for each situation: (Round your intermediate and final answers to the nearest whole dollar amount.) 4 9% $185,000 $145,000 $ 22,000 3 yes
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Answer rating: 100% (QA)
Situation 1 Amount to be recovered Fair Value 60000 Less PV of the Purchase option price 10000x056743 5674 Amount to be recovered through periodic lea... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-1260481952
10th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas
Posted Date:
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