Question

Each of the four independent situations below describes a sales-type lease in which annual lease payments of $110,000 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.) Situation 4 11% 10% 12% Lease term (years) Lessor's and lessee's interest rate Residual value: Estimated fair value Guaranteed by lessee $52,000 $8,200 $8,200 $52,000 $62,000 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

Answer 1

please use discount factor provide in your table

Situation The Lessor's: 1. Lease payments 770,000 $ (110000 x 7) 770,000 $ (110000 x 8) 880,000 $ 890,000 (110000 x 8) +(62000-52000) (110000 x 7) 1. Gross investment in lease 770,000 942,000 $ (770000 +52000) 822,000 $ (880000 +8200) 888,200 $ (880000 +52000) 1. Net investment in the lease 603,451 $ 600,406 $ 649,352 $ 633,015 110000 X 5.48592) PVAD, 9%, 7 yeas = 5.48592 (110000x 5.23054) = 575359 + ( 52000 x 0.48166) = 25046 PVAD, 11%, 7 yeas = -5.23054 PV, 11%, 7th year = 0.48166 (110000X 5.86842) = 645526 + (8200x 0.46651) = 3825 PVAD, 10% , 8 years = 5.86842 PV, 10% , 8th year = 0.46651 (110000 X 5.56376) = 612014 + (52000 X 0.40388) = 21002 PVAD, 12%, 8 years = 5.56376 PV, 12% , 8th year = 0.40388 The lessee's: 1. Lease payments 770,000 $ 770,000 $ 880,000 $ 890,000 1. Right-of-use asset 603,451 $ 645,526 600,406 $ 110000 x5.86842) $ 637,054 ( 110000 X 5.56376) = 612014 + (62000 X 0.40388) = 25041 $ 637,054 1. Lease payable 603,451 $ 600,406 $ 645,526

please comment if you have any doubt

please give thumps up if you are satisfied with the answer