Question
Mays Company manufactures machines and then leases them. Mays leases to Park Company a machine with a cost of $700,000 and a fair value of
Mays Company manufactures machines and then leases them. Mays leases to Park Company a machine with a cost of $700,000 and a fair value of the machine on the date of the lease of $750,000. The lease is for 6 years and the machine is estimated to have an unguaranteed residual value of $75,000. The lease meets the criteria for a Sales Type Lease. The lessor’s interest rate implicit in the lease is 12%, and lease payments are calculated to be $154,623.
What amount of Sales Revenue would Mays Company record when the lease is initiated?
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Modern Advanced Accounting In Canada
Authors: Hilton Murray, Herauf Darrell
7th Edition
1259066487, 978-1259066481
