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 lessors implicit rate of return.
Note: Use tables, Excel, or a financial calculator. FV of $ PV of $ FVA of $ PVA of $ FVAD of $ and PVAD of $
Situation
Lease term years
Lessor's rate of return
Fair value of lease asset $ $ $ $
Lessor's cost of lease asset $ $ $ $
Residual value:
Estimated fair value $ $ $
Guaranteed fair value $ $
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 rightofuse asset and a lease liability, for each of the above situations.
