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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

Accounting

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

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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

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