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Business, 08.04.2020 04:58 stephanieb75

Each of the three 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 Lease term (years) 10 20 4 Lessor's rate of return (known by lessee) 11% 9% 12% Lessee's incremental borrowing rate 12% 10% 10% Fair value of lease asset $600,000 $980,000 $185,000

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. (Round your answers to the nearest whole dollar.)

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