Farm Co. leased equipment to Union Co. on July 1 , Year 1 . The lease is appropriately recorded as a sales-type lease. The present value of the lease payments is $135,000 at the lease's implicit rate of 10%. The first of 8 annual lease payments of $20,000 due at the beginning of each year was received and recorded on July 1 , Year 1 . The equipment's cost on Farm's books is $110,000. What amount of interest revenue from the lease should Farm report in its December 31 , Year 1 , income statement? A. $0 B. $5,500 C. $5,750 D. $6,750