Reference no: EM132464126

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. (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                     4

Lease term (years)                        5              8                 6                 9

Lessor's rate of return                  10%           11%            9%              12%

Fair value of lease asset             $59,000        $359,000     $84,000         474,000

Lessor's cost of lease asset         $59,000         $359,000    $54,000        $474,000

Residual value:

Estimated fair value                 0                        $59,000    $16,000          $32,000

Guaranteed fair value               0                          0           $16,000         $37,000

Required:

Question 1:  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. (Round your answers to the nearest whole dollar amount.)