Crane Company manufactures a check-in kiosk with an estimated economic life of 12 years and leases it to Cheyenne Airlines for a period of 10 years. The normal selling price of the equipment is $252,640, and its unguaranteed residual value at the end of the lease term is estimated to be $21,300. Cheyenne will pay annual payments of $37,500 at the beginning of each year. Crane incurred costs of $173,900 in manufacturing the equipment and $3,900 in sales commissions in closing the lease. Crane has determined that the collectibility of the lease payments is probable and that the implicit interest rate is 11%. Cheyenne Airlines has an incremental borrowing rate of 11%. Click here to view factor tables. (a) Your Answer Correct Answer (Used) Your answer is correct. 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 O decimal places e.g. 58,971.) (b) The amount of the initial lease liability $ eTextbook and Media Solution List of Accounts Using multiple attempts has impacted your score. 20% score reduction after attempt 3 245,139 Attempts: 4 of 4 used Prepare a 10-year lease amortization schedule. (Round answers to O decimal places e.g. 58,970.) CHEYENNE AIRLINES (Lessee) Lease Amortization Schedule (Annuity-due basis and URV)
Crane Company manufactures a check-in kiosk with an estimated economic life of 12 years and leases it to Cheyenne Airlines for a period of 10 years. The normal selling price of the equipment is $252,640, and its unguaranteed residual value at the end of the lease term is estimated to be $21,300. Cheyenne will pay annual payments of $37,500 at the beginning of each year. Crane incurred costs of $173,900 in manufacturing the equipment and $3,900 in sales commissions in closing the lease. Crane has determined that the collectibility of the lease payments is probable and that the implicit interest rate is 11%. Cheyenne Airlines has an incremental borrowing rate of 11%. Click here to view factor tables. (a) Your Answer Correct Answer (Used) Your answer is correct. 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 O decimal places e.g. 58,971.) (b) The amount of the initial lease liability $ eTextbook and Media Solution List of Accounts Using multiple attempts has impacted your score. 20% score reduction after attempt 3 245,139 Attempts: 4 of 4 used Prepare a 10-year lease amortization schedule. (Round answers to O decimal places e.g. 58,970.) CHEYENNE AIRLINES (Lessee) Lease Amortization Schedule (Annuity-due basis and URV)
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 3P
Related questions
Question
Transcribed Image Text:Crane Company manufactures a check-in kiosk with an estimated economic life of 12 years and leases it to Cheyenne
Airlines for a period of 10 years. The normal selling price of the equipment is $252,640, and its unguaranteed residual
value at the end of the lease term is estimated to be $21,300. Cheyenne will pay annual payments of $37,500 at the
beginning of each year. Crane incurred costs of $173,900 in manufacturing the equipment and $3,900 in sales
commissions in closing the lease. Crane has determined that the collectibility of the lease payments is probable and
that the implicit interest rate is 11%. Cheyenne Airlines has an incremental borrowing rate of 11%.
Click here to view factor tables.
(a)
Your Answer
Correct Answer (Used)
Your answer is correct.
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 O decimal places e.g. 58,971.)
(b)
The amount of the initial lease liability
$
eTextbook and Media
Solution
List of Accounts
Using multiple attempts has impacted your score.
20% score reduction after attempt 3
245,139
Attempts: 4 of 4 used
Prepare a 10-year lease amortization schedule. (Round answers to O decimal places e.g. 58,970.)
CHEYENNE AIRLINES (Lessee)
Lease Amortization Schedule
(Annuity-due basis and URV)
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