Alia Company leased an asset to Lion Company and appropriately accounted for the lease as a direct financing lease. The asset has a fair value of $36,000 and a carrying amount of $30,000. The lease has an implicit rate of 6% and a third-party guaranteed residual value of $5,000. The lease term is three years, and the asset has a five-year useful life. The present value of a single sum at 6% and three years is .83962. What amount of deferred gross profit should Alia record at the inception of the lease?

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To calculate the deferred gross profit at the inception of the lease for a direct f... View the full answer