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Accounting

On December 31, 2011, Perry Corporation leased equipment to Admiral Company for a 5-year period. The annual lease payment, excluding executory costs, is $40,000. The interest rate for this lease is 10%. The payments are due on December 31 of each year. The first payment was made on December 31, 2011. The normal cash price for this type of equipment is $125,000 while the cost to Perry was $105,000. For the year ended December 31, 2011, by what amount will Perry's pretax earnings increase from this lease?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M954126

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