Each of the four independent situations below describes a finance lease in which annual lease payments are payable at the beginningof each year. The lessee is aware of the lessor's implicit rate of return.Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)Situation1234Lease term (years)Lessor's rate of return410%711%589%12%Fair value of lease asset$ 64,000$ 364,000$ 89,000Lessor's cost of lease asset$ 64,000$ 364,000$ 59,000$ 479,000$479,0000$ 64,000$ 21,000$ 33,00000$ 21,000$ 38,000Residual value:Estimated fair valueGuaranteed fair valueRequired:a. & b. Determine the amount of the annual lease payments as calculated by the lessor and the amount the lessee would record as aright-of-use asset and a lease liability, for each of the above situations.Note: Round your answers to the nearest whole dollar amount.Right-of-useLease PaymentsResidual ValueGuaranteePV of LeasePaymentsPV of ResidualValue GuaranteeAsset/LeaseLiabilitySituation 1Situation 2$18,355 $0 $64,000 $0 $64,000$0$0Situation 3$0$0Situation 4

A lease is a contractual agreement entered between two parties where one provides an asset for use…

a. & b. Determine the amount of the annual lease payments as calculated by the lessor and the amount the lessee would record as a right-of-use asset and a lease liability, for each of the above situations.

a. & b. Determine the amount of the annual lease payments as calculated by the lessor and the amount the lessee would record as a right-of-use asset and a lease liability, for each of the above situations.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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