Each of the four independent situations below describes a sales-type lease in which annual lease payments of $10,000 are payable at the beginning of each year. Each is a finance lease for the lessee. Lease term (years) Asset's useful life (years) Lessor's implicit rate (known by lessee) Residual value: Guaranteed by lessee Unguaranteed Purchase option: After (years) Exercise price Reasonably certain? A. The lessor's: 1. Total lease payments 2. Gross investment in the lease 3. Net investment in the lease B. The lessee's: 4. Total lease payments 5. Right-of-use asset 6. Lease liability $ 1 Determine the following amounts at the beginning of the lease: Note: Round your final answers to nearest whole dollar. 2 1 Situation 4 4 118 40,000 $ 40,000 $ 40,000 44,000 34,437 $0 $0 none 3 2 Situation $ 4,000 $0 40,000 $ 44,000 4 5 118 3 $ 7,000 no 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) 4 3 33,000 37,000 4 5 118 $ 2,000 $ 2,000 $ 1,000 no 4 4 7 11% $0 $ 4,000 3 $ 3,000 yes

Each of the four independent situations below describes a sales-type lease in which annual lease payments of $10,000 are payable at the beginning of each year. Each is a finance lease for the lessee. Lease term (years) Asset's useful life (years) Lessor's implicit rate (known by lessee) Residual value: Guaranteed by lessee Unguaranteed Purchase option: After (years) Exercise price Reasonably certain? A. The lessor's: 1. Total lease payments 2. Gross investment in the lease 3. Net investment in the lease B. The lessee's: 4. Total lease payments 5. Right-of-use asset 6. Lease liability $ 1 Determine the following amounts at the beginning of the lease: Note: Round your final answers to nearest whole dollar. 2 1 Situation 4 4 118 40,000 $ 40,000 $ 40,000 44,000 34,437 $0 $0 none 3 2 Situation $ 4,000 $0 40,000 $ 44,000 4 5 118 3 $ 7,000 no 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) 4 3 33,000 37,000 4 5 118 $ 2,000 $ 2,000 $ 1,000 no 4 4 7 11% $0 $ 4,000 3 $ 3,000 yes

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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