Cullumber Inc. manufactures an X-ray machine with an estimated life of 12 years and leases it to Chambers Medical Center for a period of 10 years. The normal selling price of the machine is $505,456, and its guaranteed residual value at the end of the non- cancelable lease termis estimated to be $16.400. The hospital will pay rents of S61.100 at the beginning of each year. Cullumber incurred costs of $227.000 in manufacturing the machine and $13.400 in legal fees directly related to the signing of the lease. Cullumber has determined that the collectibility of the lease payments is probable and that the implicit interest rate is 5%. Discuss the nature of this lease in relation to the lessor. The nature of this lease in relation to the lessor is Compute the amount of each of the following items. (Round present value factor calculations to 5 decimal places, eg. 1.25124 and the final answers to 0 decimal places, eg. 5,275.) (1) Lease receivable at commencement of the lease s (2) Sales price (3) Cost of sales %24 %24

Cullumber Inc. manufactures an X-ray machine with an estimated life of 12 years and leases it to Chambers Medical Center for a period of 10 years. The normal selling price of the machine is $505,456, and its guaranteed residual value at the end of the non- cancelable lease termis estimated to be $16.400. The hospital will pay rents of S61.100 at the beginning of each year. Cullumber incurred costs of $227.000 in manufacturing the machine and $13.400 in legal fees directly related to the signing of the lease. Cullumber has determined that the collectibility of the lease payments is probable and that the implicit interest rate is 5%. Discuss the nature of this lease in relation to the lessor. The nature of this lease in relation to the lessor is Compute the amount of each of the following items. (Round present value factor calculations to 5 decimal places, eg. 1.25124 and the final answers to 0 decimal places, eg. 5,275.) (1) Lease receivable at commencement of the lease s (2) Sales price (3) Cost of sales %24 %24

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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