Each of the three independent situations below describes a finance lease in which annual lease payments are payable at the end of each year. The lessee is aware of the lessor's implicit rate of return. (FV of $1. PV of $1, FVA of $1, PVA of $1. FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Lease term (years) Lessor's rate of return (known by lessee) Lessee's incremental borrowing rate Fair value of lease asset 1 11 11% 12% $690,000 Situation 1 Situation 2 Situation 3 Situation. 2 20 9% 10% $1,025,000 3 3 10% 9% $230,000 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. (Round your answers to the nearest whole dollar.) Lease Payments Right-of-use Asset/Lease Payable
Each of the three independent situations below describes a finance lease in which annual lease payments are payable at the end of each year. The lessee is aware of the lessor's implicit rate of return. (FV of $1. PV of $1, FVA of $1, PVA of $1. FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Lease term (years) Lessor's rate of return (known by lessee) Lessee's incremental borrowing rate Fair value of lease asset 1 11 11% 12% $690,000 Situation 1 Situation 2 Situation 3 Situation. 2 20 9% 10% $1,025,000 3 3 10% 9% $230,000 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. (Round your answers to the nearest whole dollar.) Lease Payments Right-of-use Asset/Lease Payable
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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am. 08.
Transcribed Image Text:Each of the three independent situations below describes a finance lease in which annual lease payments are payable at the end of
each year. The lessee is aware of the lessor's implicit rate of return. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of
$1) (Use appropriate factor(s) from the tables provided.)
Lease term (years)
Lessor's rate of return (known by lessee)
Lessee's incremental borrowing rate
Fair value of lease asset
1
11
11%
12%
$690,000
Situation 1
Situation 2
Situation 3
Situation
2
20
9%
10%
$1,025,000
3
3
10%
9%
$230,000
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. (Round your answers to the nearest whole dollar.)
Lease Payments Right-of-use Asset/Lease
Payable
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