Pye Company leased equipment to the Polan Company on July 1,2025 , for a ten-year period expiring June 30,2036 . Equal annual payments under the lease are$240,000and are due on July 1 of each year. The first payment was made on July 1, 2025. The rate of interest contemplated by Pye and Polan is9%. The lease receivable before the first payment is$1,680,000and the cost of the equipment on Pye's accounting records was$1,488,000. Assuming that the lease is appropriately recorded as a sale for accounting purposes by Pye, what is the amount of profit on the sale and the interest revenue that Pye would record for the year ended December31,2025?
Pye Company leased equipment to the Polan Company on July 1,2025 , for a ten-year period expiring June 30,2036 . Equal annual payments under the lease are$240,000and are due on July 1 of each year. The first payment was made on July 1, 2025. The rate of interest contemplated by Pye and Polan is9%. The lease receivable before the first payment is$1,680,000and the cost of the equipment on Pye's accounting records was$1,488,000. Assuming that the lease is appropriately recorded as a sale for accounting purposes by Pye, what is the amount of profit on the sale and the interest revenue that Pye would record for the year ended December31,2025?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Pye Company leased equipment to the Polan Company on July 1,2025 , for a ten-year period expiring June 30,2036 . Equal annual payments under the lease are$240,000and are due on July 1 of each year. The first payment was made on July 1, 2025. The rate of interest contemplated by Pye and Polan is9%. The lease receivable before the first payment is$1,680,000and the cost of the equipment on Pye's accounting records was$1,488,000. Assuming that the lease is appropriately recorded as a sale for accounting purposes by Pye, what is the amount of profit on the sale and the interest revenue that Pye would record for the year ended December31,2025?
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