Each of the four independent situations below describes a sales-type lease in which annual lease payments of $190,000 are payabl
e at the beginning of each year. Each is a finance lease for the lessee.
Situation
1 2 3 4
Lease term (years) 7 7 8 8
Lessor's and lessee's interest rate 10% 12% 11% 11%
Residual value:
Estimated fair value 0 $68,000 $9,800 $68,000
Guaranteed by lessee 0 0 $9,800 $78,000
Determine the following amounts at the beginning of the lease
Situation
1 2 3 4
A The lessor's:
1 Lease payments
2 Gross investment in the lease
3 Net investment in the lease
B The lessee's:
4 Lease payments
5 Right-of-use asset
6 Lease payable
Situation
1 2 3 4
Lease term (years) 7 7 8 8
Lessor's and lessee's interest rate 10% 12% 11% 11%
Residual value:
Estimated fair value 0 $68,000 $9,800 $68,000
Guaranteed by lessee 0 0 $9,800 $78,000
Determine the following amounts at the beginning of the lease
Situation
1 2 3 4
A The lessor's:
1 Lease payments
2 Gross investment in the lease
3 Net investment in the lease
B The lessee's:
4 Lease payments
5 Right-of-use asset
6 Lease payable
1 answer:
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Answer:
The right solution is "13,675 U".
Explanation:
According to the question,
The standard material cost will be:
=
=
=
The actual material cost will be:
=
=
hence,
The total material price variance will be:
=
=
= $ (Unfavorable)