Lessor Co. signs a lease agreement on January 1, 2021, to lease equipment to Lessee Co. The term of the non-cancelable lease is 8 years, and payments are required at the end of each year. The useful economic life of the asset is 8 years, with an unguaranteed residual value of $37,000. The equipment has a cost of $122,000 and fair value of $256,000 to Lessor. Lessors implicit rate is 10%. What is the amount of gross profit Lessor Co. should recognize related to this lease in 2021? If no gross profit should be recognized in 2021, please enter zero.

(You may or may not need present/future values for this question. If you need the present/future values, you must choose from the following present/future values. Please do not use the tables in the textbook, tables posted on the Blackboard, or values from a financial calculator.)

For n=8, i=10%,

Future value of a single sum: 2.14

Present value of a single sum: 0.47

Future value of an ordinary annuity of $1: 11.44

Present value of an ordinary annuity of $1: 5.33

Present value of an annuity due of $1: 5.87