Each of the four independent situations below describes a sales-type lease in which annual lease payments of $130,000 are payable at the beginning of each year. Each is a finance lease for the lessee. 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) Situation 1 2 3 4 Lease term (years) 7 Lessor's and lessee's interest rate 8% 7 10% 8 9% 8 11% Residual value: Estimated fair value $ 0 $ 0 $ 56,000 $ 0 $ 8,600 $ 56,000 $ 8,600 $ 66,000 Guaranteed by lessee Determine the following amounts at the beginning of the lease. Note: Round your intermediate and final answers to the nearest whole dollar amount. Situation 1 2 3 4 A. The lessor's: 1. Total lease payments $ 910,000 $ 910,000 $ 1,040,000 2. Gross investment in the lease 910,000 966,000 $1,040,000 1,048,600 1,106,000 3. Net investment in the lease 730,974 724,921 788,600 771,225 B. The lessee's: 4. Total lease payments 910,000 910,000 1,040,000 5. Right-of-use asset 730,974 6. Lease liability 730,974

Each of the four independent situations below describes a finance lease in which annual lease payments are payable at the beginning of 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) Situation 1 2 3 4 Lease term (years) Lessor's rate of return Fair value of lease asset 4 10% 7 11% 5 9% 8 12% $ 64,000 $ 364,000 $ 89,000 Lessor's cost of lease asset $ 64,000 $ 364,000 $ 59,000 $ 479,000 $ 479,000 Residual value: Estimated fair value 0 $ 64,000 $ 21,000 $ 33,000 Guaranteed fair value 0 0 $ 21,000 $ 38,000 Required: 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. Note: Round your answers to the nearest whole dollar amount. Right-of-use Lease Payments Residual Value Guarantee PV of Lease…

ompany signs an agreement on January 1, 2020, to lease equipment to Plote Company. The following information relates to this agreement. 1. 2 3. 4. 5. 6. The term of the non-cancelable lease is 3 years with no renewal option. The equipment has an estimated economic life of 5 years. The fair value of the asset at January 1, 2020, is $80,000. The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of $7,000, none of which is guaranteed. The agreement requires equal annual rental payments of $25,563 to the lessor, beginning on January 1, 2020. The lessee's incremental borrowing rate is 5%. The lessor's implicit rate is 4% and is unknown to the lessee. Plote uses the straight-line depreciation method for all equipment. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.)

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