A lease agreement calls for quarterly lease payments of $6,000 over a 15-year lease term, with the first payment at July 1, the leases inception. The interest rate is 8%. Both the fair value and the cost of the asset to the lessor are $157,000.

What would be the amount of interest expense the lessee would record in conjunction with the second quarterly payment at October 1?

Period-End	Lease Payment	Interest	Decrease in Balance	Outstanding Balance
Jul 01				$157,000
Jul 01
Oct o1

What would be the amount of interest revenue the lessor would record in conjunction with the second quarterly payment at October 1?

Interest Revenue