Abhijit Co. leased equipment from Barua Corp. on July 1, 2018, for an 8-year period expiring June 30, 2026. Equal annual payments on July 1 of each year are $120,000. The first payment was made on July 1, 2018. The rate of interest contemplated by Abhijit and Barua is 10%. The cash selling price of the equipment is $704,000, and the cost of the equipment on Barua’s accounting records is $560,000. The lease is appropriately recorded as a sales-type lease. What is the amount of selling profit on the sale and interest revenue that Barua will record for the year ended December 31, 2018?

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Abhijit Co. leased equipment from Barua Corp. on July 1, 2018, for an 8-year period expiring June 30, 2026. Equal annual payments on July 1 of each year are $120,000. The first payment was made on July 1, 2018. The rate of interest contemplated by Abhijit and Barua is 10%. The cash selling price of the equipment is $704,000, and the cost of the equipment on Barua’s accounting records is $560,000. The lease is appropriately recorded as a sales-type lease. What is the amount of selling profit on the sale and interest revenue that Barua will record for the year ended December 31, 2018?

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