Note 7 - Lease Receivable Commitments

6 Months Ended

May 31, 2023

Notes to Financial Statements

Lessor, Sales-type Leases [Text Block]

7. Lease Receivable Commitments

The Company leases restaurant equipment to a certain franchise under a sales-type lease agreement. The lease agreement does not contain any non-lease components. The lease term is for a period of seven years, beginning June 1, 2022 and ending June 1, 2029. The lease requires weekly payments of $121 for a total 365 payments, and a final optional buy-out payment of $4,800, which management believes estimates residual value. At May 31, 2023, management does not believe the unguaranteed residual asset value of $4,800 to be impaired.

During the six months ending May 31, 2023, the Company recorded interest income from the lease receivable of $237.

The sales lease is included in the balance sheet at the current value of the lease payments at a 1.25% discount rate, which reflects the rate implicit in the lease agreement.

Future minimum lease payments receivable as of May 31, 2023 are as follows:

	Undiscounted Rent Payments
Year Ending November 30:
2023	$	3,142
2024		6,283
2025		6,283
2026		6,283
2027		6,283
thereafter		14,347
Total Undiscounted Lease Payments	$	42,621
Unamortized interest income		(1,393	)
Lease receivable, net	$	41,228
Short-term lease receivable	$	5,864
Long-term lease receivable		35,364
Total lease receivable	$	41,228