Question
On December 31, 2024, Perry Corporation leased equipment to Admiral Company for a five-year period. The annual lease payment, excluding nonlease components, is $40,000.
On December 31, 2024, Perry Corporation leased equipment to Admiral Company for a five-year period. The annual lease payment, excluding nonlease components, is $40,000. The Interest rate for this lease is 10%. The payments are due on December 31 of each year. The first payment was made on December 31, 2024. The normal cash price for this type of equipment is $125,000 while the cost to Perry was $105,000. For the year ended December 31, 2024, by what amount will Perry's earnings increase due to this lease (ignore taxes)? Multiple Choice $0 $24,000 $20,000 $28,500
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