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Homework answers / question archive / Each of the four independent situations below describes a sales-type lease in which annual lease payments of $175,000 are payable at the beginning of each year
Each of the four independent situations below describes a sales-type lease in which annual lease payments of $175,000 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 $1) (Use appropriate factor(s) from the tables provided.) 1 Situation 2 3 8 9 10% 9% 8 4 9 11% 12% Lease term (years) Lessor's and lessee's interest rate Residual value: Estimated fair value Guaranteed by lessee $65,000 $9,500 $9,500 $65,000 $75,000 e 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 lessor's: 1. Lease payments 2. Gross investment in the lease 3. Net investment in the lease B The lessee's: 4. Lease payments 5. Right-of-use asset 6. Lease payable
Requirement A - The lessor's | ||||
Situation | ||||
Paticulars | 1 | 2 | 3 | 4 |
Lease Payments | 1400000 | 1400000 | 1584500 | 1650000 |
Gross Investment in the Lease | 1400000 | 1465000 | 1594000 | 1715000 |
Net Investment in the Lease | 973657 | 1057296 | 1152341 | 1130301 |
Notes: |
Lease Payments=(Annual Lease Payments*No. of Year) + Guaranteed by Lessee |
Gross Investment in Lease=Lease Payments+Estimated Fair value+Guranteed by Lessee |
Net Investment In Lease = PV of annuties + PV of Estimated Fair Value + PV of Guaranteed |
Requirement B - The lessee's | ||||
Situation | ||||
Paticulars | 1 | 2 | 3 | 4 |
Lease Payments | 1400000 | 1400000 | 1584500 | 1650000 |
Right of use of asset | 973657 | 1026973 | 1147967 | 1104891 |
Lease liability | 973657 | 1026973 | 1147967 | 1104891 |
Notes: |
Lease Payments=(Annual Lease Payments*No. of Year) + Guaranteed by Lessee |
Right of use of Asset = Lease Liability = PV of annuties + PV of Guaranteed by Lessee |