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At January 1, 2018, Rainbow leased restaurant equipment from Beaver Corporation under a six-year lease agreement in a finance lease. The lease agreement specifies annual
At January 1, 2018, Rainbow leased restaurant equipment from Beaver Corporation under a six-year lease agreement in a finance lease. The lease agreement specifies annual payments of $50,000 beginning January 1, 2018, the beginning of the lease, and at each December 31 thereafter through 2022. The equipment was acquired recently by Beaver at a cost of $240,000 and was expected to have a useful life of eight years with no salvage value at the end of its life. Beaver seeks a 8% return on its lease investments. The total decrease in earnings (pretax) in Rainbow December 31, 2018, income statement would be $55,875 $56,214. $57,577 $58,630
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