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Skysong Company manufactures a check-in kiosk with an estimated economic life of 12 years and leases it to Concord Airlines for a period of 10 years. The normal selling price of the equipment is $291,033, and its unguaranteed residual value at the end of the lease term is estimated to be $20,800. Concord will pay annual payments of $43,400 at the beginning of each year. Skysong incurred costs of $164,300 in manufacturing the equipment and $4,300 in sales commissions in closing the lease. Skysong has determined that the collectibility of the lease payments is probable and that the implicit interest rate is 11%, Concord Airlines has an incremental borrowing rate of 11%.

Skysong Company manufactures a check-in kiosk with an estimated economic life of 12 years and leases it to Concord Airlines for a period of 10 years. The normal selling price of the equipment is $291,033, and its unguaranteed residual value at the end of the lease term is estimated to be $20,800. Concord will pay annual payments of $43,400 at the beginning of each year. Skysong incurred costs of $164,300 in manufacturing the equipment and $4,300 in sales commissions in closing the lease. Skysong has determined that the collectibility of the lease payments is probable and that the implicit interest rate is 11%, Concord Airlines has an incremental borrowing rate of 11%.

Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
ChapterM: Time Value Of Money Module
Section: Chapter Questions
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View Policies Show Attempt History Current Attempt in Progress Skysong Company manufactures a check-in kiosk with an estimated economic life of 12 years and leases it to Concord Airlines for a period of 10 years. The normal selling price of the equipment is $291,033, and its unguaranteed residual value at the end of the lease term is estimated to be $20,800. Concord will pay annual payments of $43.400 at the beginning of each year. Skysong incurred costs of $164,300 in manufacturing the equipment and $4,300 in sales commissions in closing the lease. Skysong has determined that the collectibility of the lease payments is probable and that the implicit interest rate is 11%. Concord Airlines has an incremental borrowing rate of 11%. Show Transcribed Text Discuss the nature of this lease in relation to the lessee. n U This is a operating lease Compute the amount of the initial lease liability. (Round present value factor calculations to 5 decimal places, eg 1.25124 and the final answer to O decimal places eg. 58,971.) The amount of the initial lease liability $ 291161
Transcribed Image Text:View Policies Show Attempt History Current Attempt in Progress Skysong Company manufactures a check-in kiosk with an estimated economic life of 12 years and leases it to Concord Airlines for a period of 10 years. The normal selling price of the equipment is $291,033, and its unguaranteed residual value at the end of the lease term is estimated to be $20,800. Concord will pay annual payments of $43.400 at the beginning of each year. Skysong incurred costs of $164,300 in manufacturing the equipment and $4,300 in sales commissions in closing the lease. Skysong has determined that the collectibility of the lease payments is probable and that the implicit interest rate is 11%. Concord Airlines has an incremental borrowing rate of 11%. Show Transcribed Text Discuss the nature of this lease in relation to the lessee. n U This is a operating lease Compute the amount of the initial lease liability. (Round present value factor calculations to 5 decimal places, eg 1.25124 and the final answer to O decimal places eg. 58,971.) The amount of the initial lease liability $ 291161
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