Exercise 15-24 (Algo) Calculation of annual lease payments; residual value [LO15-2, 15-6]Each of the four independent situations below describes a finance lease in which annual lease payments are payable at the beginof 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 value.Guaranteed fair valueSituation 1Situation 2Situation 3Situation 4Lease Payments$$13,9072,404,8141$$$69%$ 68,000$ 68,00000 $002Residual Value PV of LeaseGuarantee PaymentsSituation$368,000$368,000910%$ 68,000068,000 $339,161 $$3Required:a. & b. Determine the amount of the annual lease payments as calculated by the lessor and the amount the lessee would record aright-of-use asset and a lease liability, for each of the above situations.Note: Round your answers to the nearest whole dollar amount.$ 93,000$ 63,00078%$ 25,000$ 25,000PV of ResidualValue Guarantee0004$$$$1011%$ 483,000$ 483,000$ 37,000$ 42,000Right-of-useAsset/LeaseLiability68,000339,16193,000483,000

Lease payments are regular, periodic payments made by a lessee to a lessor in exchange for the use…

Exercise 15-24 (Algo) Calculation of annual lease payments; residual value [LO15-2, 15-6] Each of the four independent situations below describes a finance lease in which annual lease payments are payable at the begin 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 Fair value of lease asset Lessor's cost of lease asset Residual value: Estimated fair value Guaranteed fair value 1 6 9% $ 68,000 $ 68,000 0 0 2 Situation 9 10% $368,000 $368,000 $ 68,000 0 3 7 8% $93,000 $ 63,000 $ 25,000 $ 25,000 4 10 11% $ 483,000 $ 483,000 $ 37,000 $ 42,000 Required: a. & b. Determine the amount of the annual lease payments as calculated by the lessor and the amount the lessee would record right-of-use asset and a lease liability, for each of the above situations. Note: Round your answers to the nearest whole dollar amount.

Exercise 15-24 (Algo) Calculation of annual lease payments; residual value [LO15-2, 15-6] Each of the four independent situations below describes a finance lease in which annual lease payments are payable at the begin 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 Fair value of lease asset Lessor's cost of lease asset Residual value: Estimated fair value Guaranteed fair value 1 6 9% $ 68,000 $ 68,000 0 0 2 Situation 9 10% $368,000 $368,000 $ 68,000 0 3 7 8% $93,000 $ 63,000 $ 25,000 $ 25,000 4 10 11% $ 483,000 $ 483,000 $ 37,000 $ 42,000 Required: a. & b. Determine the amount of the annual lease payments as calculated by the lessor and the amount the lessee would record right-of-use asset and a lease liability, for each of the above situations. Note: Round your answers to the nearest whole dollar amount.

Fundamentals of Financial Management (MindTap Course List)

15th Edition

ISBN:9781337395250

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter20: Hybrid Financing: Preferred Stock, Leasing, Warrants, And Convertibles

Section: Chapter Questions

Problem 13IC: FISH CHIPS INC, PART I LEASE ANALYSIS Martha Millon, financial manager for Fish it Chips Inc., has...

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