Question

Each of the four independent situations below describes a sales-type lease in which annual lease payments of $125,000 are payable at the beginning of each year. Each is a finance lease for the lessee. (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.) 1 Situation 2 3 6 7 148 10% 4 7 11% 128 Lease term (years) Lessor's and lessee's interest rate Residual value: Estimated fair value Guaranteed by lessee 0 $55,000 0 $8,500 $8,500 $ 55,000 $65,000 Determine the following amounts at the beginning of the lease: (Round your intermediate and final answer to the nearest whole dollar amount.) Situation 1 2 3 4 A The lessor's: 1. Total lease payments 2. Gross investment in the lease 3. Net investment in the lease The lessee's: 4. Total lease payments 5. Right-of-use asset 6. Lease liability B The loc

Answer 1

0 . Answers Page No The lesson's siliation ! Total lease payment - ($125000 x 6) to = $ 450,000 Gross investments in lease = $ 750,000 + O = $450,000 New investment in the lease = 1-(1+12%) 57 1 + 125000 Tescocxl 12, J + 125000x 12% 450597 +125000 = $575597 situation a Total lease payment - C$125000 X6) + 0 = $ 450,000 . Gross investment in lease = 750,000 + 55000 .. Elle 805000 Alaio investment in the base forman la cours) nuco fondament

Page No ① 429135 + 125000 + 25057 $ 579192 Siliation 3 Total lease payment = (125000 x 7) + 8500 = $883500 Grom investment Pr lease = 883500 + 8500 - $892000 Nos inverkament in the love of tarox ? -Cet102) *] + 125000 1.- it10) 125000X --- moin 1 Inverne are = New 10 I 850ot 18500 = 17000 +114000 X- = 54 4408 + 125000 7872368 = $678132 Situation a Tot al lease payment = (125000 x 7) + 65000 3 $940,000 Grous investimento in lease = 940,000 + 55000 = $995000

Page No ③ Neo Bewek met fon the lease - rusco x I-Cators *3 * 18500 + [128000 x champ 12 voor socot) = 528819 + 125000 + 57799/.. 55000 = 120,000 = * #11616 ® The lessee's The lease payment. Å situation i = ($125000 X6) = 750,000 in situation de frascco x 6) = 450,000 in situation 3 = (135000 x 7) 4 8500 = 883500 in situation 4 = (rasc00x7) +65000 = 940,000 Situation! +125000 125000 x Right of use of anet - lease liabil 127. +0 . = 450597 +125000 - 5575597

. Page No 9 Regan of one of anat - lease becbily x (un 5 ) + Silüction 2 125000 = 429135 + 125000 = $554135 Siliation 3 Right of use of anset - lease likely - fasoo x 1.1.1075"} + 185000 + festo korteris + 105000 + 8500 X 17 = 544408 + 125000 + 4362 = $673770 Situation . . Right of use of aset = deose, likilib - 1950 * * +4217) 7 + 1800 + (s5000 year why : = 528817 + 125000 + 31308 =5685125

Page No situation a s liahon 3 Situation 4 A Situation The lesson's 1. Total lease payments $750,000 62. Groos investment $750,000 in the lease 2. Net investment $575597 in the lease. The lessee's Li Total lease payment $ 750,000 5. Right of one arst $575597 Bi lease liability *575597 $750,000 $883500 $940,000 $805000 $890000 $995000 $ 579192 $678132 $411616 B $750,000 $554135 $ 554135 $883500 $ 673770 $673770 $940,000 $685105 $685125