Final answer:
To determine the lease payment that the lessee should use to determine the appropriate lease classification for each scenario, we calculate the lease payments based on the given information for each scenario.
Step-by-step explanation:
To determine the lease payment that the lessee should use to determine the appropriate lease classification for each scenario, we need to calculate the lease payment for each scenario. Let's go through each scenario:
Scenario a:
Lease payments are $5,400 per month plus 5% of lessee net sales. Lessee sales for year one are estimated to be $180,000.
Lease payment = $5,400 + 5% * $180,000 = $5,400 + $9,000 = $14,400
Scenario b:
Lease payments are computed as the greater of (a) 5% of lessee net sales or (b) $6,000. Lessee sales for year one are estimated to be $180,000.
Lease payment = max(5% * $180,000, $6,000) = max($9,000, $6,000) = $9,000
Scenario c:
Annual lease payments are 10% of lessee annual sales, with no fixed portion. Lessee sales for year one are estimated to be $180,000.
Lease payment = 10% * $180,000 = $18,000
Scenario d:
Lease payments total $9,000 in year one and increase each year based on the annual increase in the CPI at the end of the preceding year. The CPI at the end of the current year is expected to be 2%.
We need more information on how the lease payments increase based on the CPI to determine the lease payment for this scenario.