Fox Company, a dealer in machinery and equipment, leased equipment to Tiger Inc. on July 1, 2016. The lease is appropriately accounted for as a sale by Fox and as a purchase by Tiger. The lease is for a 10-<\/p>
year period (the useful life of the asset) expiring June 30, 2026. The first of 10 equal annual payments of $500,000 was made on July 1, 2016. Fox had purchased the equipment for $2,675,000 on January 1,<\/p>
2016, and established a list selling price of $3,375,000 on the equipment. Assume that the present value at July 1, 2016, of the rent payments over the lease term, discounted at 12% (the appropriate interest<\/p>
rate), was $3,165,000.<\/p>
What is the amount of profit on the sale and the amount of interest income that Fox should record for the year ended December 31, 2016?<\/p>
a. $490,000 and $159,900<\/p>
b. $490,000 and $189,900<\/p>
c. $700,000 and $189,900<\/p>
d. $0 and $159,900<\/p>", "transcribed_text": "", "related_book": { "title": "Principles Of Accounting Volume 2 Managerial Accounting", "isbn": "0357364805, 9780357364802", "edition": "1st Edition", "authors": "OpenStax", "cover_image": "https:\/\/dsd5zvtm8ll6.cloudfront.net\/si.question.images\/book_images\/2022\/04\/626124ab6f7b1_547626124ab246f0.jpg", "uri": "\/textbooks\/principles-of-accounting-volume-2-managerial-accounting-1st-edition-9780357364802", "see_more_uri": "" }, "free_related_book": { "isbn": "B0CSKTB479", "uri": "\/textbooks\/passion-casino-games-additional-money-1st-edition-b0csktb479-311836", "name": "Passion Casino Games Additional Money", "edition": "1st Edition" }, "question_posted": "2024-06-28 09:47:50", "see_more_questions_link": "\/study-help\/questions\/business-marketing-2022-June-08", "step_by_step_answer": "The Answer is in the image, click to view ...", "students_also_viewed": [ { "url": "\/luis-herrera-an-upandcoming-fashion-designer-created-a-new-line", "description": "Luis Herrera, an up-and-coming fashion designer, created a new line of men's fashion socks in response to the growing number of celebrities who are expressing their individuality by replacing...", "stars": 3 }, { "url": "\/study-help\/psychology-2e\/describe-the-bellmagendie-law-and-how-it-was-discovered-1985111", "description": "Describe the BellMagendie Law and how it was discovered.", "stars": 3 }, { "url": "\/the-trial-balance-of-clayton-cleaners-for-the-month-ended", "description": "The trial balance of Clayton Cleaners for the month ended September 30 is as follows: Data for the adjustments are as follows: a. Expired or used- up insurance, $ 800. b. Depreciation expense on...", "stars": 3 }, { "url": "\/study-help\/questions\/do-the-drones-threaten-privacy-explain-in-details-and-do-9895514", "description": "Do the drones threaten privacy? explain in details, and Do young people today view privacy differently from the previous generation?", "stars": 3 }, { "url": "\/study-help\/questions\/nebraska-inc-issues-2100-shares-of-common-stock-for-67200-8035650", "description": "Nebraska Inc. issues 2,100 shares of common stock for $67,200. The stock has a stated value of $12 per share. The journal entry to record the stock issuance would include a credit to Common Stock for...", "stars": 3 }, { "url": "\/study-help\/questions\/f93-ven-find-the-internal-forces-n-v-m-at-1025862", "description": "F9.3 VEN Find the internal forces (N. V. M) at the halfway point between points A and C. A 30 lb, B = 225 lb-ft and C = 110 lb, as shown. A 45.0 B CI +4 0.600 ft 0.800 ft 0.600 ft 3. 7K", "stars": 3 }, { "url": "\/study-help\/questions\/csx-has-suggested-that-saturn-consolidate-all-deliveries-for-southeast-1007109", "description": "CSX has suggested that Saturn consolidate all deliveries for southeast Georgia and the east coast of Florida for a once per week unit train delivery. The total outbound cost would be $210 per vehicle...", "stars": 3 }, { "url": "\/study-help\/questions\/educause-in-partnership-with-2revolutions-published-a-report-in-2015-1007506", "description": "EDUCAUSE, in partnership with 2Revolutions, published a report in 2015 entitled \"Building a Culture of Innovation in Higher Education: Design and Practice for Leaders.\" Download \"Building a Culture...", "stars": 3 }, { "url": "\/study-help\/questions\/while-we-briefly-touched-upon-some-forecasting-in-the-class-1003384", "description": "While we briefly touched upon some forecasting in the class in terms of correlations (if you remember back in Week 4), I did want to provide two additional stories on forecasting and that is...", "stars": 3 }, { "url": "\/study-help\/questions\/draw-a-3level-diagram-of-the-network-operations-and-process-1007059", "description": "Draw a 3-level diagram of the network, operations, and process levels within your own workplace.", "stars": 3 } ], "next_back_navigation": { "previous": "\/study-help\/questions\/accounting-standards-for-colleges-and-universities-participate-in-the-following-4288087", "next": "\/study-help\/questions\/this-year-brown-corporations-taxable-income-before-charitable-contribution-deduction-4288089" }, "breadcrumbs": [ { "name": "Study help", "link": "https:\/\/www.solutioninn.com\/study-help\/questions-and-answers" }, { "name": "Business", "link": "https:\/\/www.solutioninn.com\/study-help\/questions-and-answers\/business" }, { "name": "Accounting", "link": "https:\/\/www.solutioninn.com\/study-help\/questions\/business-accounting" }, { "name": "Fox Company, a dealer in machinery and equipment, leased equipment to Tiger", "link": "https:\/\/www.solutioninn.com\/study-help\/questions\/fox-company-a-dealer-in-machinery-and-equipment-leased-equipment-4288088" } ], "skill_details": { "skill_id": "9", "skill_name": "Accounting", "parent_id": "1" } }_id": "1" } }