Brief Exercise 15-16 (Algo) Lessor's Initial direct costs; sales-type lease [LO15-3, 15-7]Bryant leased equipment that had a retall cash selling price of $700,000 and a useful life of four years with no residual value. Thelessor spent $580,000 to manufacture the equipment and used an implicit rate of 9% when calculating annual lease payments of$198.228 beginning January 1, the beginning of the lease. Lease payments will be made January 1 each year of the lease. Incrementalcosts of consummating the lease transaction incurred by the lessor were $20,000.What is the effect of the lease on the lessor's earnings during the first year, not including any effect of depreciation no longer requiredon the asset under lease (Ignore taxes)?Note: Input decreases to Income as negative amounts.Impact on lessor's pretax earnings

Meaning of lease : A lease refers to a contract where one party grants a right to use a property or…

ssor spent $580,000 to manufacture the equipment and u 198,228 beginning January 1, the beginning of the lease. L osts of consummating the lease transaction incurred by the That is the effect of the lease on the lessor's earnings duri

ssor spent $580,000 to manufacture the equipment and u 198,228 beginning January 1, the beginning of the lease. L osts of consummating the lease transaction incurred by the That is the effect of the lease on the lessor's earnings duri

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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