Question
Splish 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
Splish 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 $279,694, and its unguaranteed residual value at the end of the lease term is estimated to be $18,300. National will pay annual payments of $41,800 at the beginning of each year. Splish incurred costs of $167,000 in manufacturing the equipment and $4,300 in sales commissions in closing the lease. Splish has determined that the collectibility of the lease payments is probable and that the implicit interest rate is 11%.
Compute the amount of each of the following items. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answers to 0 decimal places, e.g. 5,275.)
1. Lease Receivable
2. Sales Price
3. Cost of Sales
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