Manji Each of the four independent situations below describes a finance lease in which annual lease payments are payable at the beginningof 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)Lease term (years)Lessor's rate of returnFair value of lease assetLessor's cost of lease assetResidual value:Estimated fair valueGuaranteed fair valueSituation 1Situation 2Situation 3Situation 4Lease Payments$$$$113,824 $44,650 $11,009 $60,14669%$ 68,000$ 68,000000002Residual Value PV of LeaseGuaranteePaymentsSituation$368,000$368,000910%$ 68,00003$$$Required:a. & b. Determine the amount of the annual lease payments as calculated by the lessor and the amount the lessee would record as aright-of-use asset and a lease liability, for each of the above situations.Note: Round your answers to the nearest whole dollar amount.78%$ 93,000$ 63,000$ 25,000$ 25,000PV of ResidualValue Guarantee40$0$0 $$1011%$ 483,000$ 483,000$ 37,000$ 42,000Right-of-useAsset/LeaseLiability68,000368,00093,000483,000

A lease is defined as a contractual agreement incorporated between two business entities where one…

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. Situation 1 Situation 2 Situation 3 Situation 4 Lease Payments $ $ $ $ Residual Value Guarantee 13,824 $ 44,650 $ 11,009 $ 60,146 0 0 0 PV of Lease Payments PV of Residual Value Guarantee $ $ $ 0 0 0 $ $ $ $ Right-of-use Asset/Lease Liability 68,000 368,000 93,000 483,000

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. Situation 1 Situation 2 Situation 3 Situation 4 Lease Payments $ $ $ $ Residual Value Guarantee 13,824 $ 44,650 $ 11,009 $ 60,146 0 0 0 PV of Lease Payments PV of Residual Value Guarantee $ $ $ 0 0 0 $ $ $ $ Right-of-use Asset/Lease Liability 68,000 368,000 93,000 483,000

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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