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On January 1, 2019, Precision Pumps leases nonspecialized pumping equipment to Mega Construction. The equipment is delivered on January 1. The lease term is 4
On January 1, 2019, Precision Pumps leases nonspecialized pumping equipment to Mega Construction. The equipment is delivered on January 1. The lease term is 4 years with no renewal or purchase options, and title to the leased ansat is relained by the lessor at the end of the lease term. The ease requires annual fixed rental payments of $5,000 per year beginning on January 1, 2019, and the December 31 of each year starting on December 31, 2019. The fair value of the equipment is $31,531 and has a carrying amount on Precision's books of $21,441. The equipment has a remaining life of 8 years. The estimated residual value of the equipment is $14,000. The lessee does not guarantee the residual value, bul Precision secured an urrelated third party to quarantee $14,600 collection of this guaranteed residual value and lease payments are reasonably certain. The rate implicit in the lease is 9%. There are no prepaid rentals, and neither party to the agreement pays initial direct costs What amount of Sales Revenue is recorded al commencement of the lease? OA. $21.188 O B. $21.441 OC. $31,531 OD. $24,000 Click to select your
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