Question
Each of the four independent situations below describes a sales-type lease in which annual lease payments of $145,000 are payable at the beginning of each
Each of the four independent situations below describes a sales-type lease in which annual lease payments of $145,000 are payable at the beginning of each year. Each is a finance lease for the lessee. (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 | ||||||
| 1 | 2 | 3 | 4 | |||
| Lease term (years) | 6 | 6 | 7 | 7 | ||
| Lessor's and lessee's interest rate | 11% | 10% | 12% | 12% | ||
| Residual value: | ||||||
| Estimated fair value | 0 | $59,000 | $8,900 | $59,000 | ||
| Guaranteed by lessee | 0 | 0 | $8,900 | $69,000 | ||
Determine the following amounts at the beginning of the lease: (Round your intermediate and final answer to the nearest whole dollar amount.)
| Situation | |||||
| 1 | 2 | 3 | 4 | ||
| A | The lessor's | ||||
| 1. Total lease payments | 870,000 | 870,000 | 1,015,000 | ||
| 2. Gross investment in the lease | 870,000 | 929,000 | |||
| 3. Net investment in the lease | 680,906 | ||||
| B. | The lessee's | ||||
| 4. Total lease payments | 870,000 | 870,000 | 1,015,000 | 1,025,000 | |
| 5. Right-of-use asset | 680,906 | 694,665 | 741,155 | ||
| 6. Lease liability | 680,906 | 694,665 | 741,155 | ||
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Essentials Of Xbrl Financial Reporting In The 21st Century
Authors: Bryan Bergeron
1st Edition
0471220779, 978-0471220770
