Canarsie company leased equipment to fulton inc on january, Ask an Expert

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Canarsie Company leased equipment to Fulton Inc. on January 1, 2014. The lease is for an eight-year period expiring December 31, 2021. The first of eight equal annual payments of $900,000 was made on January 1, 2014. Canarsie had purchased the equipment on December 29, 2013, for $4,800,000. The lease is appropriately accounted for as a sales-type lease by Canarsie. Assume that the present value at January 1, 2014, of all rent payments over the lease term discounted at a 10 percent interest rate was $5,280,000. What amount of interest revenue should Canarsie record in 2015 (the second year of the lease period) as a result of the lease?

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Category:- Accounting Basics
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