Brightway Corporation leased machinery to Sterling Enterprises on January 1, 2015 under a five-year lease ending on January 1, 2020. The first annual lease payment of $950,000 was made on January 1, 2015. The cash selling price of the machinery is $4,100,500, which is equal to the present value of the lease payments at 7%. Brightway purchased the machinery for $3,600,000. For 2015, how much interest revenue should Brightway report? a. $252,030 b. $287,035 c. $320,000 d. $410,050

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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How much interest revenue should Brightway report on these financial accounting question?

Brightway Corporation leased machinery to Sterling Enterprises on January 1,
2015 under a five-year lease ending on January 1, 2020. The first annual lease
payment of $950,000 was made on January 1, 2015. The cash selling price of
the machinery is $4,100,500, which is equal to the present value of the lease
payments at 7%. Brightway purchased the machinery for $3,600,000. For
2015, how much interest revenue should Brightway report?
a. $252,030
b. $287,035
c. $320,000
d. $410,050
Transcribed Image Text:Brightway Corporation leased machinery to Sterling Enterprises on January 1, 2015 under a five-year lease ending on January 1, 2020. The first annual lease payment of $950,000 was made on January 1, 2015. The cash selling price of the machinery is $4,100,500, which is equal to the present value of the lease payments at 7%. Brightway purchased the machinery for $3,600,000. For 2015, how much interest revenue should Brightway report? a. $252,030 b. $287,035 c. $320,000 d. $410,050
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