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 beginning of each year. The lessee is aware of the lessor's implicit rate of return. Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of $1, FVA of $1. PVA of $1. FVAD of $1 and PVAD of $1) Situation 2 B 4 Lease term (years) Lessor's rate of return Fair value of lease asset 5 10% 8 11% 6 9% 9 12% $ 57,000 Lessor's cost of lease asset $ 57,000 $ 357,000 $ 357,000 $ 82,000 $ 52,000 $ 472,000 $ 472,000 Residual value: Estimated fair value 0 $ 57,000 $ 14,000 $ 29,000 Guaranteed fair value 0 $ 14,000 $ 34,000 Required: 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 amount. Answer is complete but not entirely correct. Lease Payments Residual Value PV of Lease PV of Residual Right-of-use Guarantee Payments Value Guarantee Asset/Lease Liability Situation 1 Situation 2 S 13,669 S 0 $ 57,000 $ 0 $ 57,000 $ 62,450 $ Situation 3 $ 15,063 Situation 4 $ 77,039 555 0 $ 357,000 $ 0 0 $ 73,652 $ 0 0 $ 459,739 8,348 S 555 357,000 82,000 x 472,000
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 beginning of each year. The lessee is aware of the lessor's implicit rate of return. Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of $1, FVA of $1. PVA of $1. FVAD of $1 and PVAD of $1) Situation 2 B 4 Lease term (years) Lessor's rate of return Fair value of lease asset 5 10% 8 11% 6 9% 9 12% $ 57,000 Lessor's cost of lease asset $ 57,000 $ 357,000 $ 357,000 $ 82,000 $ 52,000 $ 472,000 $ 472,000 Residual value: Estimated fair value 0 $ 57,000 $ 14,000 $ 29,000 Guaranteed fair value 0 $ 14,000 $ 34,000 Required: 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 amount. Answer is complete but not entirely correct. Lease Payments Residual Value PV of Lease PV of Residual Right-of-use Guarantee Payments Value Guarantee Asset/Lease Liability Situation 1 Situation 2 S 13,669 S 0 $ 57,000 $ 0 $ 57,000 $ 62,450 $ Situation 3 $ 15,063 Situation 4 $ 77,039 555 0 $ 357,000 $ 0 0 $ 73,652 $ 0 0 $ 459,739 8,348 S 555 357,000 82,000 x 472,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![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 beginning
of each year. The lessee is aware of the lessor's implicit rate of return.
Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of $1, FVA of $1. PVA of $1. FVAD of $1 and PVAD of $1)
Situation
2
B
4
Lease term (years)
Lessor's rate of return
Fair value of lease asset
5
10%
8
11%
6
9%
9
12%
$ 57,000
Lessor's cost of lease asset
$ 57,000
$ 357,000
$ 357,000
$ 82,000
$ 52,000
$ 472,000
$ 472,000
Residual value:
Estimated fair value
0
$ 57,000
$ 14,000
$ 29,000
Guaranteed fair value
0
$ 14,000
$ 34,000
Required:
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 amount.
Answer is complete but not entirely correct.
Lease
Payments
Residual
Value
PV of
Lease
PV of Residual
Right-of-use
Guarantee
Payments
Value
Guarantee
Asset/Lease
Liability
Situation 1
Situation 2
S
13,669 S
0
$
57,000
$
0
$
57,000
$
62,450 $
Situation 3 $
15,063
Situation 4
$
77,039
555
0
$
357,000
$
0
0 $
73,652
$
0
0 $
459,739
8,348 S
555
357,000
82,000 x
472,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fff546e29-455d-4318-bfe2-0bca53e2e972%2F0ade2519-e237-47f4-91ba-d586888add9f%2Ftuxmqjw_processed.png&w=3840&q=75)
Transcribed Image Text: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 beginning
of each year. The lessee is aware of the lessor's implicit rate of return.
Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of $1, FVA of $1. PVA of $1. FVAD of $1 and PVAD of $1)
Situation
2
B
4
Lease term (years)
Lessor's rate of return
Fair value of lease asset
5
10%
8
11%
6
9%
9
12%
$ 57,000
Lessor's cost of lease asset
$ 57,000
$ 357,000
$ 357,000
$ 82,000
$ 52,000
$ 472,000
$ 472,000
Residual value:
Estimated fair value
0
$ 57,000
$ 14,000
$ 29,000
Guaranteed fair value
0
$ 14,000
$ 34,000
Required:
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 amount.
Answer is complete but not entirely correct.
Lease
Payments
Residual
Value
PV of
Lease
PV of Residual
Right-of-use
Guarantee
Payments
Value
Guarantee
Asset/Lease
Liability
Situation 1
Situation 2
S
13,669 S
0
$
57,000
$
0
$
57,000
$
62,450 $
Situation 3 $
15,063
Situation 4
$
77,039
555
0
$
357,000
$
0
0 $
73,652
$
0
0 $
459,739
8,348 S
555
357,000
82,000 x
472,000
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