Each of the four independent situations below describes a finance lease in which
ID: 2553019 • Letter: E
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. (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 Lease term (years) Lessor's rate of return Pair value of lease asset Lessor's cost of lease asset Residual values 98 10 8 11% $69,000 $369,000 $94,000 $484,000 $69,000 $369,000 $64,000 $484,000 Estimated fair value Guaranteed fair value 0 69,000 $26, 000 38,000 $26,000 43,000 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 above situations. (Round your PV factor answers to 5 decimal places and other answer to nearest whole dollar.) Right-of-use AsseLease Residual Value PV of Lease PV of Residual Payments Value Guarantee Lease Payments Guarantere Situation 1 Situation2 Situation 3 Situation 4Explanation / Answer
Fair Value Guranteed Fair Value*PVF Lease Guranteed*PVF Resudial PV Lease payment+PV Guranteed Lease payment Residual Value-Gurantee PV of Lease Payment PV of Residual Value-Gurantee Right of use/Lease liability PVF Lease PVF Residual 1 69000 0 292539.3 - 2,92,539 PV 9% 5 Year 4.2397 0.6499 2 369000 0 2165439.6 - 21,65,440 PV 10% 8 Year 5.8684 0.4665 3 94000 26000 469313.8 16,385.2000 4,85,699 PV 8% 6 Year 4.9927 0.6302 4 484000 43000 2974712.4 16,808.7000 29,91,521 PV 11% 9 Year 6.1461 0.3909
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