problem 21-08

Flounder Inc. Manufactures an X-Ray machine with an estimated life of 12 years and leases it to Culver Medical Center for a period of 10 years. The normal selling price of the machine is $527,495 and its guaranteed residual value at the end of the non-canelable lease term is estimated to be $14,000. The hospital will pay rents of $64,000 at the beginning of each year. Flounder incurred costs of $274,000 in manufacturing the machine and $13,600 in legal fees directly related to the signing of the lease. Flounder has determined that the collectibility of the lease payments is probable and that the implicit interest rate is 5% and an expected residual value at the end of the lease of $10,000.

Problem 21-08 Flounder Inc. manufactures an X-ray machine with an estimated life of 12 years and leases it to Culver Medical Center for a period of 10 years. The normal selling price of the machine is $527,495, and its guaranteed residual value at the end of the non-cancelable lease term is estimated to be $14,000. The hospital will pay rents of $64,000 at the beginning of each year, Flounder incurred costs of $274,000 in manufacturing the machine and $13,600 in legal fees directly related to the signing of the lease. Flounder has determined that the collectibility of the lease payments is probable and that the implidt interest rate is 5%. Culver Medical Center has an incremental borrowing rate of 5% and an expected residual value at the end of the lease of $10,000 Click here to view factor tables, Discuss the nature of this lease in relation to the lessee. The nature of this lease in relation to the lessee is finance lease Compute the amount of the initial lease liality. (Round present value factor calculations to s decimal places 5,275.) 1.25124 and the final answer to o decimal places Initial Lease Liability SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT Prepare a 10-year lease amortization schedule. (Round answers to o decimal places g. 5,275.) CULVER MEDICAL (Lessee) Lease Amortization schedule (Annuity Due Basis, GRV) Interest on Reduction of Leas Unpaid Liability Liability Beginning of Year Annual Lease Payment Plus GRV Lease Liability Initial PV MacBook Air Prepare a 10-year lease amortization schedule. (Round answers to o decimal plac CULVER MEDICAL (Lessee) Lease Amortization Schedule (Annuity Due Basis, GRV) Beginning Annual Lease Interest on Reduction of Lease of Year Payment Plus GRV Unpaid Liability Liability Initial PV Lease Llability NET End of 10 SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT MacBook Air Prepare all of the lessee's journal entries for the first year. (Credit account titles are automatically Indented when amount is entered. Do not indent man regulred, select "No Entry for the account ties and enter for the amounts. Round answers to O decimal places g. 5,275.) Account Titles and Explanation Debit Credit (To record the lease of x-ray equipment using finance les (To record payment of annual lease obligation) (To record accrual of annual interest on lease obligation.) (To record amortization expense for year 1 using straight-line method.) SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT Suppose Chambers Medical Center incurred use asset be affected? cument preparation costs after the execution of the lease. How would the initial measurement of the le MacBook Air