George Company manufactures a check-in kiosk with an estimated economic life of 12 years and leases it to National Airlines for a period of 10 years. The normal selling price of the equipment is $299,140, and its unguaranteed residual value at the end of the lease term is estimated to be $20,000. National will pay annual payments of $40,000 at the beginning of each year. George incurred costs of $180,000 in manufacturing the equipment and $4,000 in sales commissions in closing the lease. George has determined that the collectibility of the lease payments is probable and that the implicit interest rate is 8%. National Airlines has an incremental borrowing rate of 8%.

Compute the amount of the initial lease liability. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971.)

Prepare a 10-year lease amortization schedule. (Round answers to 0 decimal places e.g. 58,970.)

Prepare all of the lessees journal entries for the first year. Assume straight-line depreciation. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places e.g. 58,970.)

Discuss the nature of this lease in relation to the lessee. This is a finance lease Compute the amount of the initial lease liability. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971.) The amount of the initial lease liability Beginning of Year Lease AIUILIZOLIUI SLicuule Annuity-due basis and URV) Interest on Reduction of Lease Lease Liability Liability Annual Lease Payment Lease Liability Initial PV 0 40000 40000 40000 40000 40000 40000 40000 40000 40000 40000 40000 400000 Account Titles and Explanation Debit Credit Right-of-Use Asset 289876 289876 T Lease Liability (To record the lease.) Lease Liability 40000 * Cash 40000 (To record the first rental payment.) Interest Expense Lease Liability (To record accrual of annual interest on lease obligation.) TAmortization Expense Right-of-Use Asset (To record amortization expense for first year.)