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. 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 return (known by lessee) Lessee's incremental borrowing rate Fair value of lease asset Required: 1 Situation 2 3 10 20 6 1.1% 9% 12% 12% 10% 11% $780,000 $1,160,000 $365,000 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. Lease Payments Right-of-use Asset/Lease Payable Situation 1 Situation 2 Situation 3
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. 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 return (known by lessee) Lessee's incremental borrowing rate Fair value of lease asset Required: 1 Situation 2 3 10 20 6 1.1% 9% 12% 12% 10% 11% $780,000 $1,160,000 $365,000 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. Lease Payments Right-of-use Asset/Lease Payable Situation 1 Situation 2 Situation 3
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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![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.
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 return (known by lessee)
Lessee's incremental borrowing rate
Fair value of lease asset
Required:
1
Situation
2
3
10
20
6
1.1%
9%
12%
12%
10%
11%
$780,000
$1,160,000
$365,000
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.
Lease Payments
Right-of-use Asset/Lease
Payable
Situation 1
Situation 2
Situation 3](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F02260666-3aaa-46b9-bb6b-495443444ab3%2F86f6e2a3-26e9-464c-b8a9-0453d320b1eb%2Fuxp8lbi_processed.png&w=3840&q=75)
Transcribed Image Text: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.
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 return (known by lessee)
Lessee's incremental borrowing rate
Fair value of lease asset
Required:
1
Situation
2
3
10
20
6
1.1%
9%
12%
12%
10%
11%
$780,000
$1,160,000
$365,000
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.
Lease Payments
Right-of-use Asset/Lease
Payable
Situation 1
Situation 2
Situation 3
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