Question
In: Accounting
For each of the three independent situations below determine the amount of the annual lease payments....
For each of the three independent situations below determine the
amount of the annual lease payments. Each describes a finance lease
in which annual lease payments are payable at the beginning of each
year. Each lease agreement contains an option that permits the
lessee to acquire the leased asset at an option price that is
sufficiently lower than the expected fair value that the exercise
of the option appears reasonably certain. (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 | |||||||||
| 1 | 2 | 3 | |||||||
| Lease term (years) | 5 | 5 | 4 | ||||||
| Lessor's rate of return | 9 | % | 10 | % | 8 | % | |||
| Fair value of leased asset | $ | 84,000 | $ | 432,000 | $ | 197,000 | |||
| Lessor's cost of leased asset | $ | 62,000 | $ | 432,000 | $ | 157,000 | |||
| Purchase option: | |||||||||
| Exercise price | $ | 22,000 | $ | 62,000 | $ | 34,000 | |||
| Exercisable at end of year: | 5 | 5 | 3 | ||||||
| Reasonably certain? | yes | no | yes | ||||||
Determine the annual lease payments for each situation:
(Round your intermediate and final answers to the nearest
whole dollar amount.)
Solutions
ekkarill92 answered 11 months agoRelated Solutions
For each of the three independent situations below determine the amount of the annual lease payments....
For each of the three independent situations below determine the
amount of the annual lease payments. Each describes a finance lease
in which annual lease payments are payable at the beginning of each
year. Each lease agreement contains an option that permits the
lessee to acquire the leased asset at an option price that is
sufficiently lower than the expected fair value that the exercise
of the option appears reasonably certain. (FV of $1, PV of $1, FVA
of $1,...
For each of the three independent situations below determine the amount of the annual lease payments....
For each of the three independent situations below determine the
amount of the annual lease payments. Each describes a finance lease
in which annual lease payments are payable at the beginning of each
year. Each lease agreement contains an option that permits the
lessee to acquire the leased asset at an option price that is
sufficiently lower than the expected fair value that the exercise
of the option appears reasonably certain. (FV of $1, PV of $1, FVA
of $1,...
For each of the three independent situations below determine the amount of the annual lease payments....
For each of the three independent situations below determine the
amount of the annual lease payments. Each describes a finance lease
in which annual lease payments are payable at the beginning of each
year. Each lease agreement contains an option that permits the
lessee to acquire the leased asset at an option price that is
sufficiently lower than the expected fair value that the exercise
of the option appears reasonably certain. (FV of $1, PV of $1, FVA
of $1,...
For each of the three independent situations below determine the amount of the annual lease payments....
For each of the three independent situations below determine the
amount of the annual lease payments. Each describes a capital lease
in which annual lease payments are payable at the beginning of each
year. Each lease agreement contains an option that permits the
lessee to acquire the leased asset at an option price that is
sufficiently lower than the expected fair value that the exercise
of the option appears reasonably certain. (FV of $1, PV of $1, FVA
of $1,...
Each of the three independent situations below describes a finance lease in which annual lease payments...
Each of the three 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 lessor's
implicit rate of return. (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
1
2
3
Lease term (years)
11
21
5
Lessor's rate of return (known by lessee)
10%
8%...
Each of the three independent situations below describes a finance lease in which annual lease payments...
Each of the three independent situations below describes a
finance lease in which annual lease payments are payable at the
end of each year. The lessee is aware of the lessor’s
implicit rate of return. (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
1
2
3
Lease term (years)
9
20
4
Lessor's rate of return (known by lessee)
12%
10%...
Each of the three independent situations below describes a finance lease in which annual lease payments...
Each of the three 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 lessor's
implicit rate of return. (FV of $1, PV of $1, FVA of $1, PVA of $1,
FVAD of $1and PVAD of $1) (Use appropriate factor(s) from
the tables provided.)
Situation
1
2
3
Lease term (years)
10
20
5
Lessor's rate of return (known by lessee)
11%
9%
12%...
Each of the three independent situations below describes a finance lease in which annual lease payments...
Each of the three 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 lessor’s
implicit rate of return. (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 1 2 3 Lease term (years) 10 20 4
Lessor's rate of return (known by lessee) 10% 8%...
Each of the three independent situations below describes a finance lease in which annual lease payments...
Each of the three independent situations below describes a
finance lease in which annual lease payments are payable at the
end of each year. The lessee is aware of the lessor’s
implicit rate of return. (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
1
2
3
Lease term (years)
8
15
3
Lessor's rate of return
11%
9%
12%
Lessee's incremental...
Each of the three independent situations below describes a finance lease in which annual lease payments...
Each of the three independent situations below describes a
finance lease in which annual lease payments are payable at the
end of each year. The lessee is aware of the lessor’s
implicit rate of return. (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
1
2
3
Lease term (years)
10
15
5
Lessor's rate of return
10%
8%
11%
Lessee's incremental...
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