Problem 1 - Bonus not included as part of computation in Right of Asset

Annual rental 600,000

PV ordinarty annuity of 10% 3.791
200,000
0.621
Lease liability
Initial Direct Cost
Lease incentives
Right use of Asset
Depreciation

Date Payment
1/1/2019
12/31/2019 600,000
12/31/2020 600,000
12/31/2021 600,000
12/31/2022 600,000
12/31/2023 600,000

Annual rental for remaining 2 years old lease term 600,000

PV of ordinary annuity of 1 at 8% - 2 years 1.783
Present Value - January 1, 2022
Annual rental for 5 year starting January 1, 2024 700,000
PV of ordinary annuity of 1 at 8% - 5 years 3.993
Present Value - January 1, 2024
PV of 1 at 8% for 2 periods
Present Value
Total Present Value - January 1, 2022
PV December 31, 2021
Increase in liability

Date Payment
1/1/2022
12/31/2022 600,000
12/31/2023 600,000
12/31/2024 700,000
12/31/2025 700,000
12/31/2026 700,000
12/31/2027 700,000
12/31/2028 700,000

Lease Bonus 175,000

3 years 105,000
Remaining
7 years upon extension
Bonus payment

Problem 2
Annual rental 800,000
PV ordinarty annuity of 12% in advance 6.328
PV rentals
Purchase option 400,000
PV of 1 at 12% - 10 years 0.322
Lease liability
Initial Direct cost
Right use of asset
Depreciation

Date Payment
1/1/2019
1/1/2019 800,000
1/1/2020 800,000
1/1/2021 800,000
1/1/2022 800,000
1/1/2023 800,000
1/1/2024 800,000
1/1/2025 800,000
1/1/2026 800,000
1/1/2027 800,000
1/1/2028 800,000

Right use of asset

Depreciation for 10 years
Carrying amount
Lease liability January 1, 2028
Loss on finance lease

Problem 3
1st 750,000
2nd 900,000
3rd 900,000
4th 1,200,000
5th 1,200,000
Total Rent Income
Annual Income
2019
Lease Bonus
Total Income
Depreciation
Initial direct cost 30,000
Total expense

Rent Receivable 2020

Rent Receivable 2021
Rent Receivable 2022
Rent Receivable 2023

Problem 4
Fair Value of the building
PV annuity due of 10%
Minimum lease payment
Executory Cost
Total annual lease payment

Gross rentals (550,000*10)

Net Investment equal to the Fair Value
Unearned interest income

Date Payment
1/1/2019
12/31/2019 550,000
12/31/2020 550,000
12/31/2021 550,000
12/31/2022 550,000
12/31/2023 550,000
12/31/2024 550,000
12/31/2025 550,000
12/31/2026 550,000
12/31/2027 550,000
12/31/2028 550,000

Problem 5
Cost of equipment - 2019
Unguaranteed residual value (400000*.466)
Net Investment

Annual rental (4694400/5.868)

Date of payment Payment

 1/1/2019
1/1/2019 800,000
1/1/2020 800,000
1/1/2021 800,000
1/1/2022 800,000
1/1/2023 800,000
1/1/2024 800,000
1/1/2025 800,000
1/1/2026 800,000

No payment made in December 31, 2020

Gross rentals (800000*8)
Net Investment
Unearned interest income
Less: Interest
2019 389,440
2020 348,384
2021 303,222
Net - Unearned intersest Income
Lease Receivable 1/1/2021
Lease Receivable - Net

Problem 6
Gross Rentals (1800000*5)
Unguaranteed RV
Gross Investment

PV of gross rentals (1800000*3.605)

PV of Unguaranteed RV (600000*.567)
Net Investment

Cost of Machinery
PV of Unguaranteed RV
COGS

PV of gross rentals
COGS
Gross Profit

Date
1/1/2019
12/31/2019
12/31/2020
12/31/2021
12/31/2022
 12/31/2023

Gross Profit
Interest Income
Total Income

Problem 7 - Ownership will be transferred to lessee

Gross rentals (2200000*5)
PV of gross rentals (2200000*4.037)
Total Financial Revenue

PV of gross rentals (2200000*4.037)

Cost of Equipment
Net loss

Date

1/1/2019
12/31/2019
Net loss
Interest Income
Total Income
 2,274,600

124,200
2,398,800
150,000
100,000
2,324,600
424,920

Interest Principal Present Value

2,398,800
239,880 360,120 2,038,680
203,868 396,132 1,642,548
164,255 435,745 1,206,803
120,680 479,320 727,483
72,517 527,483 200,000

Right use of Asset - January 1, 2019

Depreciation 3 years
1,069,800 Carrying amount December 31, 2021
Increase in liability
Right use of Asset - January 1, 2022
2,795,100 Depreciation
0.857
2,395,401
3,465,201
1,206,803
2,258,398 No.4

Interest Principal Present Value

3,465,201
277,216 322,784 3,142,417
251,393 348,607 2,793,810
223,505 476,495 2,317,315
185,385 514,615 1,802,700
144,216 555,784 1,246,916
99,753 600,247 646,669
53,331 646,669 0

70,000
 7
10,000

5,062,400

128,800
5,191,200
100,000
5,291,200
390,933 No.3

Interest Principal Present Value

5,191,200
800,000 4,391,200
526,944 273,056 4,118,144
494,177 305,823 3,812,321
457,479 342,521 3,469,800
416,376 383,624 3,086,176
370,341 429,659 2,656,517
318,782 481,218 2,175,299
261,036 538,964 1,636,335
196,360 603,640 1,032,695
167,305 632,695 400,000

5,291,200
3,909,333
1,381,867
400,000
981,866 No.5

375,000 62,500 2019

900,000 75,000.00
900,000 75,000.00
1,200,000 100,000.00
1,200,000 100,000.00 2020
4,575,000
915,000 No.3
762,500.00
40,000 2021
802,500 No.1
 480,000
25,000 2022
505,000 No.2

552,500
567,500 2023
332,500
47,500
2024

3,379,750
6.145
550,000 No. 1
30,000
580,000 Noo. 2

5,500,000
3,379,750
2,120,250 No.3

Interest Principal Present Value

3,379,750
337,975 212,025 3,167,725
316,773 233,228 2,934,498
293,450 256,550 2,677,947
267,795 282,205 2,395,742
239,574 310,426 2,085,316
208,532 341,468 1,743,848
174,385 375,615 1,368,233
136,823 413,177 955,056
95,506 454,494 500,561
49,439 500,561 (0)

4,880,800
186,400
4,694,400 No.1

800,000 No.2

Date of Interest incurred Interest Principal Present Value

 4,694,400
800,000 3,894,400
12/31/2019 389,440 410,560 3,483,840
12/31/2020 348,384 451,616 3,032,224
12/31/2021 303,222 496,778 2,535,446
12/31/2022 253,545 546,455 1,988,991
12/31/2023 198,899 601,101 1,387,890
12/31/2024 138,789 661,211 726,679
12/31/2025 73,321 726,679 0

3,483,840 No.4
6,400,000
4,694,400
1,705,600

1,041,046
664,554
3,032,224
2,367,670 No.5

9,000,000
600,000
9,600,000 No.1

6,489,000
340,200
6,829,200 No.2

4,000,000
(340,200)
3,659,800

6,489,000
(3,659,800)
2,829,200 No.4

Payment Interest Principal

1,800,000 819,504 980,496

1,800,000 701,844 1,098,156
1,800,000 570,066 1,229,934
1,800,000 422,474 1,377,526
 1,800,000 256,912 1,543,088

2,829,200
819,504
3,648,704 No.5

11,000,000
8,881,400
2,118,600 No.1

8,881,400
9,500,000
(618,600) No.2

Payment Interest Principal

2,200,000
801,768
(618,600)
801,768
183,168 No.4
No.1
No.2

2,324,600
1,274,760
1,049,840
2,258,398
3,308,238 No.3
472605 No.5

No.6
No.7
No.1
No.2

No.4

DR
Cash 250,000.00
Rent Receivable 512,500.00
Rent Income

Cash 875,000.00
Rent Receivable 40,000.00
Rent Income

Cash 900,000.00
Rent Receivable 15,000.00
Rent Income
Cash 1,150,000.00
Rent Receivable
Rent Income

Cash 1,200,000.00
Rent Receivable
Rent Income
Cash 200,000.00
Rent Receivable
Rent Income

No.4
No.3

Present Value
6,829,200
5,848,704 No.3
4,750,548
3,520,614
2,143,088
 600,000

Present Value
8,881,400
6,681,400
5,879,632 No.3
Problem 1 - Bonus included as part of computation in Right of Asset
Annual rental 600,000
PV ordinarty annuity of 10% 3.791 2,274,600
200,000
0.621 124,200
Lease liability 2,398,800
Initial Direct Cost 150,000
Lease bonus 175,000
Lease incentives 100,000
Right use of Asset 2,499,600
Depreciation 459,920

Date Payment Interest

1/1/2019
12/31/2019 600,000 239,880
12/31/2020 600,000 203,868
12/31/2021 600,000 164,255
12/31/2022 600,000 120,680
12/31/2023 600,000 72,517

Annual rental for remaining 2 years old lease term 600,000

PV of ordinary annuity of 1 at 8% - 2 years 1.783
Present Value - January 1, 2022 1,069,800
Annual rental for 5 year starting January 1, 2024 700,000
PV of ordinary annuity of 1 at 8% - 5 years 3.993
Present Value - January 1, 2024 2,795,100
PV of 1 at 8% for 2 periods 0.857
Present Value 2,395,401
Total Present Value - January 1, 2022 3,465,201
PV December 31, 2021 1,206,803
Increase in liability 2,258,398

Date Payment Interest

1/1/2022
12/31/2022 600,000 277,216
12/31/2023 600,000 251,393
12/31/2024 700,000 223,505
12/31/2025 700,000 185,385
12/31/2026 700,000 144,216
12/31/2027 700,000 99,753
12/31/2028 700,000 53,331
CR

762,500.00

915,000.00
915,000.00

235,000.00
915,000.00

285,000.00
915,000.00

47,500.00
152,500.00
Problem 7 - Ownership will be transferred to lessee - if 10 years
Gross rentals (2200000*10) 22,000,000
PV of gross rentals (2200000*6.328) 13,921,600
Total Financial Revenue 8,078,400

PV of gross rentals (2200000*6.328) 13,921,600

Cost of Equipment 9,500,000
Net Income 4,421,600

Date Payment

1/1/2019 2,200,000
12/31/2019
Net loss 4,421,600
Interest Income 1,406,592
Total Income 5,828,192
Principal Present Value
2,398,800
360,120 2,038,680 No.1
396,132 1,642,548 No.2
435,745 1,206,803
479,320 727,483
527,483 200,000

Right use of Asset - January 1, 2019 2,499,600

Depreciation 3 years 1,379,760
Carrying amount December 31, 2021 1,119,840
Increase in liability 2,258,398
Right use of Asset - January 1, 2022 3,378,238 No.3
Depreciation 482605 No.5

No.4

Principal Present Value

3,465,201
322,784 3,142,417 No.6
348,607 2,793,810 No.7
476,495 2,317,315
514,615 1,802,700
555,784 1,246,916
600,247 646,669
646,669 0
No.1

No.2

Interest Principal Present Value

13,921,600
11,721,600
1,406,592 10,315,008 No.3

No.4
Problem 1 - With Residual Value & bonus included in the right use of asset
Annual rental 600,000
PV ordinarty annuity of 10% 3.791 2,274,600
200,000
0.621 124,200
Lease liability 2,398,800
Initial Direct Cost 150,000
Lease Bonus 175,000
Lease incentives 100,000
Right use of Asset 2,499,600
Depreciation 459,920

Date Payment Interest Principal

1/1/2019
12/31/2019 600,000 239,880 360,120
12/31/2020 600,000 203,868 396,132
12/31/2021 600,000 164,255 435,745
12/31/2022 600,000 120,680 479,320
12/31/2023 600,000 72,517 527,483

Annual rental for remaining 2 years old lease term 600,000

PV of ordinary annuity of 1 at 8% - 2 years 1.783
Present Value - January 1, 2022 1,069,800
Annual rental for 5 year starting January 1, 2024 700,000
PV of ordinary annuity of 1 at 8% - 5 years 3.993
Present Value - January 1, 2024 2,795,100
PV of 1 at 8% for 2 periods 0.857
Present Value 2,395,401
Guaranteed residual value 200,000
PV of 1 at 8% 0.583 116,600
Total Present Value - January 1, 2022 3,581,801
PV December 31, 2021 1,206,803
Increase in liability 2,374,998 No.4

Date Payment Interest Principal

1/1/2022
12/31/2022 600,000 286,544 313,456
12/31/2023 600,000 261,468 338,532
12/31/2024 700,000 234,385 465,615
12/31/2025 700,000 197,136 502,864
12/31/2026 700,000 156,907 543,093
12/31/2027 700,000 113,459 586,541
12/31/2028 700,000 68,301 631,699
Present Value
2,398,800
2,038,680 No.1
1,642,548 No.2
1,206,803
727,483
200,000

Right use of Asset - January 1, 2019 2,499,600

Depreciation 3 years 1,379,760
Carrying amount December 31, 2021 1,119,840
Increase in liability 2,374,998
Right use of Asset - January 1, 2022 3,494,838 No.3
Depreciation 470691 No.5

Present Value
3,581,801
3,268,345 No.6
2,929,812 No.7
2,464,197
1,961,333
1,418,240
831,699
200,000