Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Elba Company leased machinery to Conecuh Company on January 1, 2017, for a ten-year period expiring December 31, 2026. Equal annual payments under the lease

Elba Company leased machinery to Conecuh Company on January 1, 2017, for a ten-year period expiring December 31, 2026. Equal annual payments under the lease are $300,000 and are due on January 1 of each year. The first payment was made on January 1, 2017. The rate of interest used by Elba and Conecuh is 9%. The cash selling price of the machinery is $2,100,000 and the cost of the machinery on Elba's accounting records was $1,860,000. Assuming that the lease is appropriately recorded as a sale for accounting purposes by Elba, what amount of interest revenue would Elba record for the year ended December 31, 2017?

A.

$0

B.

$162,000

C.

$189,000

D.

$81,000

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Survey of Accounting

Authors: Edmonds, old, Mcnair, Tsay

2nd edition

9780077392659, 978-0-07-73417, 77392655, 0-07-734177-5, 73379557, 978-0073379555

More Books

Students also viewed these Accounting questions