George Company manufactures a check-in kiosk with an estimated economic life of
ID: 2455496 • Letter: G
Question
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 $292,131, and its unguaranteed residual value at the end of the lease term is estimated to be $24,200. National will pay annual payments of $40,300 at the beginning of each year and all maintenance, insurance, and taxes. George incurred costs of $172,900 in manufacturing the equipment and $5,350 in negotiating and closing the lease. George has determined that the collectibility of the lease payments is reasonably predictable, that no additional costs will be incurred, and that the implicit interest rate is 9%.
(a)
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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 $292,131, and its unguaranteed residual value at the end of the lease term is estimated to be $24,200. National will pay annual payments of $40,300 at the beginning of each year and all maintenance, insurance, and taxes. George incurred costs of $172,900 in manufacturing the equipment and $5,350 in negotiating and closing the lease. George has determined that the collectibility of the lease payments is reasonably predictable, that no additional costs will be incurred, and that the implicit interest rate is 9%.
Explanation / Answer
George Company manufactures a check-in kiosk with an estimated economic life of
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