On July 1, Y6, Nickel Ltd. leases equipment from Dime Corp., under an eight year capital (finance)
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On July 1, Y6, Nickel Ltd. leases equipment from Dime Corp., under an eight year capital (finance) lease. Equal annual payments of $100,000 are required, payable on July 1 of each year. The first payment is made on July 1, Y6. The appropriate rate of interest for this lease is 9%, and title will transfer to Nickel at the end of the lease contract. The fair value of the equipment is $620,000 and the cost in Dime's accounting records is $550,000. The present value of the lease payments is $620,637. What is the amount of gross profit and interest income that Dime would record for the year ended December 31, Y6?
Related Book For
Intermediate Accounting Reporting and Analysis
ISBN: 978-1285453828
2nd edition
Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach
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