essee, Inc., acquired the use of a machine by agreeing to pay the manufacturer of the machine $20,000 per year for 5 years. At the time the lease was signed, the interest rate for a 5-year loan was 8%. Required (a.) Use the appropriate factor from Table 6-5 to calculate the amount that Lessee, Inc. could have paid at the beginning of the lease to buy the machine outright. (b.) What causes the difference between the amount you calculated in part (a.) and the total of $100,000 ($20,000 per year for 5 years) that Lessee, Inc. will pay under the terms of the lease? (c.) What is the appropriate amount of cost to be reported in Lessee, Inc's balance sheet (at the time the lease was signed) with respect to this asset? Chapter 6 Accounting for and Presentation of Property. Plant, and Equipmen t, and Other Noncurrent Assets 209 Factors for Calculating the Preeent Value of an Annuity of $1 Table 6-5 Discount Rate No. of Periods 2% 4% 8% 10% 12% 14% 16% 18% 20% 0.980 0.9615 0.9434 09259 0.9091 0.8929 0.8772 0.8621 0.8475 0.8333 1.942 1.8881 1.8334 1.7833 1.7355 1.6901 1.6467 1.6052 1.5656 1.5278 2.884 2.7751 2.6730 2.5771 2.4869 2.4018 2.3216 2.2459 2.1743 2.1065 3.808 3.6299 3.4651 3.3121 3.1699 3.0373 2.9137 2.7982 2.6901 2.5887 4.713 4.4518 4.2124 39927 3.7908 3.6048 3.4331 3.2743 3.1272 2.9906 5.601 5.2421 4.9173 4.6229 4.3553 4.1114 3.8887 3.6847 3.4976 3.3255 6.472 60021 5.5824 5.2064 4.8684 4.5638 4.2883 4.0386 3.8115 3.6046 7.325 6.7327 6.2098 5.7466 5.3349 49676 4.6389 4.3436 4.0776 3.8372 8.162 7.4353 6.8017 6.2469 5.7590 5.3282 4.9464 4.6085 4.3030 4.0310 8.983 8.1109 7.3601 6.7101 6.1446 5.6502 5.2161 4.8332 4.4941 4.1925 9.787 8.7605 7.8869 7.1390 6.49515.93775.4527 5.0286 4.6560 4.3271 10.575 9.3851 8.3838 7.5361 6.8137 6.1944 5.6603 5.1971 4.7932 4.4382 11.348 9.9856 8.8527 7.9038 7.1034 6.4235 5.8424 5.3423 4.90964.5327 12.106 10.5631 9.2950 8.2442 7.3667 6.6282 6.0021 6.4675 5.0081 4 6106 12849 11.1184 9.7122 8.5585 7.6061 6.8109 6.1422 5.5755 5.0916 4.6755 13.578 11.6523 10.1059 8.8514 7.8237 6.9740 6.26515.6685 5.1624 4.7296 14.292 12.1657 10.4773 9.1216 8.0216 71196 6.3729 5.7487 5.2223 4.7746 4.992 12.6593 10.8276 9.3719 8.2014 7.2497 6.4674 5.8178 5.2732 4.8122 15.678 13.1339 11.1581 9.6036 8.3649 7.3658 6.5504 5.8775 5.3162 4.8435 6.351 13.5903 11.4699 9.8181 8.5138 7.4694 6.6231 5.9288 5.3527 4.8696 17.011 14.0292 11.7641 10.0168 8.6487 7.5820 6.6870 5.9731 5.3837 4.8913 17.658 14.4511 12.0416 10.2007 8.7715 7.6446 6.7429 6.0113 5.4099 4.9094 18.292 14.8568 12.3034 10.3711 8.8832 7.7184 6.7921 6.0442 5.4321 4.9245 18.914 15.2470 12.5504 10.5288 8.9847 7.7843 6.8351 6.0726 5.45094.9371 19.523 15.6221 12.7834 10.6748 9.0770 7.8431 6.8729 6.0971 5.4669 4.9476 22.396 17.2920 13.7648 11.2578 9.4269 8.0552 7.0027 6.1772 5.5168 4.9789 24.999 18.6646 14.4982 11.6546 9.6442 8.1755 7.0700 6.2153 5.5386 49915 27.355 19.7928 15.0463 119246 9.7791 8.2438 7.1050 62335 5.5482 4.9968 29.490 20.7200 15.4558 12.1084 9.8628 8.2825 7.1232 6.2421 .5523 4.9986 31.424 21.4822 15.7619 12.2335 9.9148 8.3045 7.1327 6.2463 5.5541 4.9995 45
