Information for four separate finance/sales-type lease scenarios is provided as follows:

Required 

Answer the following questions for each separate scenario, assuming that the lessee is aware of the lessor's implicit lease rate.

a. Compute the lessor's lease payment.

b. Compute the lessee's balance of the lease liability at the commencement of the lease.

c. Compute the lessee's balance of the right-of-use asset at the commencement of the lease.

Transcribed Image Text:

Lessor's desired rate of return Implicit rate known by the lessee. Lessee's incremental borrowing rate Lease term. Fair value of underlying asset. Beginning or end of year payments A B 0 6% 7% 8% 7.5% yes yes no 7% 6% 7% 8% 5 8 5 8 $100,000 Beginning $45,000 $275,000 $18,000 Beginning Beginning End