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On January 1, 2016, Oxley Corporation leased equipment to Bells Company. The lease term is 12 years. The first payment of $706,000 was made on January 1, 2016. The equipment cost Oxley Corporation $5,110,500. The present value of the minimum lease payments is $5,510,500. The lease is appropriately classified as a sales- type lease. Assuming the interest rate for this lease is 9%, how much interest revenue will Oxley record in 2017 on this lease? (Round your answer to the nearest dollar.) a. $273,595. b. $403,291. c. $432,405. d. $407,781.

On January 1, 2016, Oxley Corporation leased equipment to Bells Company. The lease term is 12 years. The first payment of $706,000 was made on January 1, 2016. The equipment cost Oxley Corporation $5,110,500. The present value of the minimum lease payments is $5,510,500. The lease is appropriately classified as a sales- type lease. Assuming the interest rate for this lease is 9%, how much interest revenue will Oxley record in 2017 on this lease? (Round your answer to the nearest dollar.) a. $273,595. b. $403,291. c. $432,405. d. $407,781.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 2016, Oxley Corporation leased equipment to Bells Company. The lease term is 12 years. The first payment of $706,000 was made on January 1, 2016. The equipment cost Oxley Corporation $5,110,500. The present value of the minimum lease payments is $5,510,500. The lease is appropriately classified as a sales- type lease. Assuming the interest rate for this lease is 9%, how much interest revenue will Oxley record in 2017 on this lease? (Round your answer to the nearest dollar.) a. $273,595. b. $403,291. c. $432,405. d. $407,781.
Transcribed Image Text:On January 1, 2016, Oxley Corporation leased equipment to Bells Company. The lease term is 12 years. The first payment of $706,000 was made on January 1, 2016. The equipment cost Oxley Corporation $5,110,500. The present value of the minimum lease payments is $5,510,500. The lease is appropriately classified as a sales- type lease. Assuming the interest rate for this lease is 9%, how much interest revenue will Oxley record in 2017 on this lease? (Round your answer to the nearest dollar.) a. $273,595. b. $403,291. c. $432,405. d. $407,781.
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