The following are some of the characteristics of an asset available for lease.

Requirement a. Determine the amount of lease payment that the lessor would require to lease the asset.

Requirement b. Compute the lessor's net investment in the lease at initial recognition.

Requirement c. Compute the value of the lessee's right-of-use (ROU) asset at initial recognition.

Requirement d. Compute the lessee's lease liability at initial recognition.

- Lease characteristics 120,000 Fair value of leased asset Lease term years Annual Beginning of year 16,000 Payment frequency Payment timing Guaranteed residual value Amount expected to be paid out under the guaranteed residual Interest rate implicit in the lease (not readily determinable by the lessee) 9,600 14% Lessee's incremental borrowing rate 12%