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)
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Situation
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1
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2
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3
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Lease term (years)
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10
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20
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4
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Lessor's rate of return (known by lea)
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11
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9
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12
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Lessee's incremental borrowing rate
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12
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10
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11
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Fair value of leased asset
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$600,00
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$980,000
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$185,000
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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.