On January 1, 20x1, Entity Y leases out a piece of equipment to Entity X. Information on the lease is as follows: Lease term3 yearsAnnual rent payable at the end of each year100,000Interest rate implicit in the lease10% The lease provides for the transfer of ownership of the equipment to the lessee at the end of the lease term. What total amount of finance income will Entity Y recognize over the lease term?

The question is related to Accounting for Lease. The Finance Income will be calculated by deducting…

Answered: On January 1, 20x1, Entity Y leases out…

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, 20x1, Entity Y leases out a piece of equipment to Entity X. Information on the lease is as follows:

Lease term	3 years
Annual rent payable at the end of each year	100,000
Interest rate implicit in the lease	10%

The lease provides for the transfer of ownership of the equipment to the lessee at the end of the lease term. What total amount of finance income will Entity Y recognize over the lease term?

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