A lease agreement that qualifies as a finance lease calls for annual lease payments of $36,000 over a four-year lease term (also the assetâs useful life), with the first payment at January 1, the beginning of the lease. The interest rate is 5%. (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.)
Required:
a. Complete the amortization schedule for the first two payments.
b. If the lesseeâs fiscal year is the calendar year, what would be the amount of the lease liability that the lessee would report in its balance sheet at the end of the first year? What would be the interest payable?
A lease agreement that qualifies as a finance lease calls for annual lease payments of $36,000 over a four-year lease term (also the assetâs useful life), with the first payment at January 1, the beginning of the lease. The interest rate is 5%. (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.)
Required:
a. Complete the amortization schedule for the first two payments.
b. If the lesseeâs fiscal year is the calendar year, what would be the amount of the lease liability that the lessee would report in its balance sheet at the end of the first year? What would be the interest payable?
Related questions
A lease agreement that qualifies as a capital lease calls for annual lease payments of $30,000 over a five-year lease term, with the first payment at January 1, the leaseâs inception. The interest rate is 4%
Prepare an amortization table:
| |||||||||||||||||||||
| If lesseeâs fiscal year is the calendar year, what would be the amount of the lease liability that the lessee would report in its balance sheet at the end of the first year? |
| What would be the interest payable? |
Each of the three independent situations below describes acapital lease in which annual lease payments are payable at thebeginning of each year. The lessee is aware of the lessorâsimplicit 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) fromthe tables provided.) |
| Situation | |||
| 1 | 2 | 3 | |
| Lease term(years) | 15 | 25 | 5 |
| Lessorâs rate ofreturn (known by lessee) | 11% | 9% | 12% |
| Lesseeâs incrementalborrowing rate | 12% | 10% | 11% |
| Fair value of leasedasset | $740,000 | $1,120,000 | $325,000 |
| Required: |
| a. | Determine the amount of the annual lease payments as calculatedby the lessor and above situations. Lease Payments |
| Situation 1: Situation 2: Situation 3: |
| b. | Determine the amount lessee would record as a leased asset and alease liability for above situations. |
| Lease Asset/ Lease Liability Situation 1: Situation 2: Situation 3: |
