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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
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 3 S 1 2 4 Lease term (years) Lessor's rate of return Fair value of lease asset Lessor's cost of lease asset Residual value: Estimated fair value Guaranteed fair value 10% $67,000 $67,000 11% $367,000 $367,000 9% $92,000 $62,000 12% $482,000 $482,000 0 0 $ 67,000 0 $24,000 $ 24,000 $ 36,000 $ 41,000 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.) Lease Payments Residual Value Guarantee $ 16,068 $ 0 PV of Lease Payments $ 67,000 PV of Residual Value Guarantee $ Right-of-use Asset/Lease Liability 67,000 Situation 1 Situation 2 Situation 3 Situation 4
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