Determine the amount of the annual lease payments

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Question - Each of the three independent situations below describe a capital lease in which annual lease payments are payable at the beginning of each year.  The leases is aware of the lessor's implicit rate of return. (FV of $!, PV of $1, FVA of $1, PVA of $1 and PVAD of $1)

 

Situation

 

1

2

3

Lease term (years)

10

20

4

Lessor's rate of return (known by lea)

11

9

12

Lessee's incremental borrowing rate

12

10

11

Fair value of leased asset

$600,00

$980,000

$185,000

Required - Determine the amount of the annual lease payments as calculated by the lessor and the amount the lessee would record as a leased asset/liability, for above situations.

Reference no: EM131577111

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