Exercise 15-15 (Algo) Sales-type lease; lessor; income statement effects [LO 15-3]

King Company leased equipment from Mann Industries. The lease agreement qualifies as a finance lease and requires annual lease payments of $36,461 over a eight-year lease term (also the assets useful life), with the first payment at January 1, the beginning of the lease. The interest rate is 6%. The asset being leased cost Mann $190,000 to produce. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Determine the price at which the lessor is selling the asset (present value of the lease payments).

2. What would be the amounts related to the lease that the lessor would report in its income statement for the year ended December 31 (ignore taxes)?

Required 1 Required 2 Determine the price at which the lessor is "selling and final answers to the nearest whole dollar.) PV factors based on Table or Calculator function: Lease Payment PVAD of $1 $ 36,461 n = 6.0% 240,000 PV of Lease Payments $ Required 1 Required 2 What would be the amounts related to the lease that the lessor would report in its income statement for the year ended December 31 (ignore taxes)? (Input decreases to income as negative amounts. Round your intermediate and final answers to the nearest whole dollar.) Income Statement For the year ended December 31 Income statement effect