Question
Each of the four independent situations below describes a sales-type lease in which annual lease payments of $10,000 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 $10,000 are payable at the beginning of each year. Each is a finance lease for the lessee. Determine the following amounts at the beginning of the lease.
The lessors:
Lease payments
Gross investment in the lease
Net investment in the lease
The lessees:
Lease payments
Right-of-use asset
Lease liability
|
| Situation | |||
|
| 1 | 2 | 3 | 4 |
| Lease term (years) | 4 | 4 | 4 | 4 |
| Assets useful life (years) | 4 | 5 | 5 | 7 |
| Lessors implicit rate (known by lessee) | 11% | 11% | 11% | 11% |
| Residual value: |
|
|
|
|
| Guaranteed by lessee | 0 | $4,000 | $2,000 | 0 |
| Unguaranteed | 0 | 0 | $2,000 | $4,000 |
| Purchase option: |
|
|
|
|
| After (years) | none | 3 | 4 | 3 |
| Exercise price | n/a | $7,000 | $1,000 | $3,000 |
| Reasonably certain? | n/a | no | no | yes |
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