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Each of the four independent situations below describes a finance lease in which annual lease...

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Question

Accounting

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 $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) 4 7 5 8
Lessor's rate of return 10% 11% 9% 12%
Fair value of lease asset $ 61,000 $ 361,000 $ 86,000 $ 476,000
Lessor's cost of lease asset $ 61,000 $ 361,000 $ 56,000 $ 476,000
Residual value:
Estimated fair value 0 $ 61,000 $ 18,000 $ 30,000
Guaranteed fair value 0 0 $ 18,000 $ 35,000

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.

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