Water Co. leased machine from Air Co. on July 1, 2018 for an 8-year period expiring June 30, 2026. Equal payments under the lease are $60,000 and are due on July 1 of each year. The first payment was made on July 1, 2018. The rate of interest contemplated by Water and Air is 10%. The cash selling price of the machine is $352,000 and the cost of the machine on Air's accounting records is $280,000. The lease is appropriately recorded as sales-type lease. What is the amount of interest revenue that Air should record for the year ended December 31, 2018?
Water Co. leased machine from Air Co. on July 1, 2018 for an 8-year period expiring June 30, 2026. Equal payments under the lease are $60,000 and are due on July 1 of each year. The first payment was made on July 1, 2018. The rate of interest contemplated by Water and Air is 10%. The cash selling price of the machine is $352,000 and the cost of the machine on Air's accounting records is $280,000. The lease is appropriately recorded as sales-type lease. What is the amount of interest revenue that Air should record for the year ended December 31, 2018?
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter20: Accounting For Leases
Section: Chapter Questions
Problem 10MC: On August 1, 2019, Kern Company leased a machine to Day Company for a 6-year period requiring...
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Water Co. leased machine from Air Co. on July 1, 2018 for an 8-year period expiring June 30, 2026. Equal payments under the lease are $60,000 and are due on July 1 of each year. The first payment was made on July 1, 2018. The rate of interest contemplated by Water and Air is 10%. The cash selling price of the machine is $352,000 and the cost of the machine on Air's accounting records is $280,000. The lease is appropriately recorded as sales-type lease. What is the amount of interest revenue that Air should record for the year ended December 31, 2018?
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