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At January 1, 2019, Alpha leased restaurant equipment from Spring Corporation under a six-year lease agreement in a finance lease. The lease agreement specifies annual
At January 1, 2019, Alpha leased restaurant equipment from Spring Corporation under a six-year lease agreement in a finance lease. The lease agreement specifies annual payments of $20,000 beginning January 1, 2019, the beginning of the lease, and at each December 31 thereafter through 2023. The equipment was acquired recently by Spring at a cost of $120,000 and was expected to have a useful life of eight years with no salvage value at the end of its life. Spring seeks a 5% return on its lease investments. The total decrease in earnings (pretax) in Alpha December 31, 2019, income statement would be
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