Bryant leased equipment that had a retail cash selling price of $660,000 and a useful life of six years with no residual value. The lessor paid $560,000 to acquire the equipment and used an implicit rate of 9% when calculating annual lease payments of $134,979 beginning January 1, the beginning of the lease. Lease payments will be made January 1 each year of the lease. Incremental costs of consummating the lease transaction incurred by the lessor were $18,000. What is the effect of the lease on the lessor's earnings during the first year (ignore taxes)? (Input decreases to income as negative amounts. Round Interest revenue to the nearest whole dollar.) Impact on lessor's pretax earnings Interest revenue Cost of goods sold Sales revenue Selling expense Income effect $ 0 0
Bryant leased equipment that had a retail cash selling price of $660,000 and a useful life of six years with no residual value. The lessor paid $560,000 to acquire the equipment and used an implicit rate of 9% when calculating annual lease payments of $134,979 beginning January 1, the beginning of the lease. Lease payments will be made January 1 each year of the lease. Incremental costs of consummating the lease transaction incurred by the lessor were $18,000. What is the effect of the lease on the lessor's earnings during the first year (ignore taxes)? (Input decreases to income as negative amounts. Round Interest revenue to the nearest whole dollar.) Impact on lessor's pretax earnings Interest revenue Cost of goods sold Sales revenue Selling expense Income effect $ 0 0
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Bryant leased equipment that had a retail
cash selling price of $660,000 and a
useful life of six years with no residual
value. The lessor paid $560,000 to
acquire the equipment and used an
implicit rate of 9% when calculating
annual lease payments of $134,979
beginning January 1, the beginning of the
lease. Lease payments will be made
January 1 each year of the lease.
Incremental costs of consummating the
lease transaction incurred by the lessor
were $18,000.
What is the effect of the lease on the
lessor's earnings during the first year
(ignore taxes)? (Input decreases to
income as negative amounts. Round
Interest revenue to the nearest whole
dollar.)
Impact on lessor's pretax earnings
Interest revenue
Cost of goods sold
Sales revenue
Selling expense
Income effect
$
0
0
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