Information for 12, 13, and 14. n=6, i=% , PV Annuity Due: 4.79079, PV Single Sum: 0.56447

12. The lease agreement specifies six annual payments of $92,931 starting at the time of lease inception. Incremental borrowing rate= implicit rate=10%, There is an unguaranteed residual value of 60,000 at the end of the lease term. The lease is correctly classified as a sales type lease for the lessor and a capital lease for the lessee. At the inception before recording the first payment a. Lessors Sale is $479,081 b. Lessors gross investment in the lease is $617,586 c. Lessees lease liability is $479,081 d. None of above

13. The lease agreement specifies six annual payments of $92,931 starting at the time of lease inception, Jan. 1 of year1. Incremental borrowing rate= implicit rate=10%, the lessee guaranteed a residual value of $60,000 at the end of the lease term. The lease is correctly classified as a capital lease for the lessee and a direct financing lease for the lessor. a. Lessors gross investment in the lease at the inception before the first payment is $557,586 b. Lessees lease liability at the inception before the first payment is $479,081 c. Lessees leased asset at the inception before the first payment is $445,213 d. Lessors interest revenue for the year1 is 45,023

14. The lease agreement specifies six annual payments of $92,931 starting at the time of lease inception. Incremental borrowing rate= implicit rate=10%, The bargain purchase option price at the end of the lease term is $60,000. The lease is correctly classified as a capital lease for the lessee and a sales type lease for the lessor. At the inception before recording the first payment a. Lessors Sale is $479,081 b. Lessors gross investment in the lease is $557,586 3. Lessees lease liability is $445,213 d. Lessees leased asset is $445,213

The answer is B,B,A

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