Crane Company leased machinery to Stine Company on July 1, 2021, for a 10-year period expiring June 30, 2031. Equal annual payments under the lease are $249000 and are due on July 1 of each year. The first payment was made on July 1, 2021. The rate of interest used by Crane and Stine is 8%. The lease receivable before the first payment is $1740000 and the cost of the machinery on Crane’s accounting records was $1540000. Assuming that the lease is appropriately recorded as a sale for accounting purposes by Crane, what amount of interest revenue would Crane record for the year ended December 31, 2021? $139200 $119280 $59640 $0
Crane Company leased machinery to Stine Company on July 1, 2021, for a 10-year period expiring June 30, 2031. Equal annual payments under the lease are $249000 and are due on July 1 of each year. The first payment was made on July 1, 2021. The rate of interest used by Crane and Stine is 8%. The lease receivable before the first payment is $1740000 and the cost of the machinery on Crane’s accounting records was $1540000. Assuming that the lease is appropriately recorded as a sale for accounting purposes by Crane, what amount of interest revenue would Crane record for the year ended December 31, 2021? $139200 $119280 $59640 $0
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Crane Company leased machinery to Stine Company on July 1, 2021, for a 10-year period expiring June 30, 2031. Equal annual payments under the lease are $249000 and are due on July 1 of each year. The first payment was made on July 1, 2021. The rate of interest used by Crane and Stine is 8%. The lease receivable before the first payment is $1740000 and the cost of the machinery on Crane’s accounting records was $1540000. Assuming that the lease is appropriately recorded as a sale for accounting purposes by Crane, what amount of interest revenue would Crane record for the year ended December 31, 2021?
$139200
$119280
$59640
$0
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