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Lessee Company leased equipment from Lessor Company on July 1, 2020, for an eight-year period expiring June 30, 2028. Equal annual payments under the lease
Lessee Company leased equipment from Lessor Company on July 1, 2020, for an eight-year period expiring June 30, 2028. Equal annual payments under the lease are $400,000 and are due on July 1 of each year. The first payment was made on July 1, 2020. The rate of interest contemplated by Lessee and Lessor is 8%. The cash lease receivable before the first payment is $2,482,500 and the cost of the equipment on Lessor's accounting records was $2,200,000. Assuming that the lease is appropriately recorded as a sale for accounting purposes by Lessor, what is the amount of profit on the sale and the interest income that Lessor would record for the year ended December 31, 2020? $0 and $0 $282,500 and $83,300 $282,500 and $99 300 $0 and $83,300
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