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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 lessors: | ||||
1. Total lease payments | $870,000selected answer correct | $870,000selected answer correct | $1,015,000selected answer correct | $1,015,000selected answer correct | |
2. Gross investment in the lease | 870,000selected answer correct | 929,000selected answer correct | 1,032,800selected answer incorrect | 1,143,000selected answer incorrect | |
3. Net investment in the lease | 680,906selected answer correct | 776,514selected answer incorrect | 805,193selected answer incorrect | 799,054selected answer incorrect | |
B | The lessees: | ||||
4. Total lease payments | 870,000selected answer correct | 870,000selected answer correct | 1,023,900selected answer incorrect | 1,084,000selected answer incorrect | |
5. Right-of-use asset | 680,906selected answer correct | 694,666selected answer correct | 800,325selected answer incorrect | 772,365selected answer incorrect | |
6. Lease liability | 680,906selected answer correct | 694,666selected answer correct | 800,325selected answer incorrect | 772,365 |
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