FALL 2010 Final - Lessor Table

PMT INT 8% Princ

($5,150,732.87) ($1,364,790.45) ($3,785,942.42)

($5,150,732.87) ($1,061,915.05) ($4,088,817.82)
($5,150,732.87) ($734,809.63) ($4,415,923.24)
($5,150,732.87) ($381,535.77) ($4,769,197.10)

($20,602,931.49)

Note that fter Year 4, there will be $2,940,119 (PV of residual) left in lease account after above amorti

Entries (Net Method):

Lease Payments Receivable *** $ 20,000,000

Sales **
Cost of Sales ** $ 14,659,881
Inventory

** An adjustment had to be made to numbers given due to the PV of the residual value:

*** In a sales type lease like this one, the lessor wants to "move" the product , so the entire value of t
At the end of the lease term someone else will be assumed to pick up the asset so it is not put back in

Entries (Gross Method):

Note that the entries are largely the same as the net method except for the addition of un

Lease Payments Receivable *** $ 24,602,931

Sales **
Cost of Sales ** $ 17,600,000
Inventory
Unearned Finance Revenue

Required i)

Installment including Exec costs: $5,282,732.87

 Table does NOT account for RV:

PV
$17,059,880.59 Total Cash Flows Collected over lea
$13,273,938.16
$9,185,120.35 Lease Payments
$4,769,197.10 Residual Value
$0.00
Total
Less: Principal:

idual) left in lease account after above amortizations. INTEREST OVER LEASE TERM

Breakdown of Interest:
Lease Payments less PV at Start of Leas
Discounting of Residual Value
Total Interest:
$ 17,059,881

$ 17,600,000

to the PV of the residual value: $2,940,119.41

o "move" the product , so the entire value of the asset (including RV) is booked to lease receivable.
med to pick up the asset so it is not put back in the asset ppol as in our other non sales type example.

net method except for the addition of unearned finance revenue:

$ 20,000,000

$ 17,600,000
$ 4,602,931
Cash Flows Collected over lease term:

$ 20,602,931.49
$ 4,000,000.00

$ 24,602,931.49
$ (20,000,000.00)

EST OVER LEASE TERM $ 4,602,931.49

down of Interest:
Payments less PV at Start of Lease (Table) $3,543,050.90
nting of Residual Value $1,059,880.59
$4,602,931.49

to lease receivable.
n sales type example.
Lessee Table:
PMT INT 10% Princ PV
$16,327,130.15 N.B: Ok since less than FV of asset
($5,150,732.87) ($1,632,713.01) ($3,518,019.86) $12,809,110.29
($5,150,732.87) ($1,280,911.03) ($3,869,821.84) $8,939,288.45
($5,150,732.87) ($893,928.84) ($4,256,804.03) $4,682,484.42
($5,150,732.87) ($468,248.44) ($4,682,484.43) ($0.01) round to 0.

($20,602,931.49)