Question
On July 1, 2019, Huey Corp. leased heavy equipment to Duey Inc. for one year, at $60,000 a month. Duey returned the equipment on June
On July 1, 2019, Huey Corp. leased heavy equipment to Duey Inc. for one year, at $60,000 a month. Duey returned the equipment on June 30, 2020, and the next day, Huey Corp. leased this equipment to Luey Ltd. for three years, at $75,000 a month. The original cost of the equipment was $3,200,000. The equipment, which has been continually on lease since July 1, 2017, is being depreciated on a straight-line basis over ten years with no residual value. Assuming that both the lease to Duey and the lease to Luey are appropriately recorded as operating leases for accounting purposes, how much net income (loss) before income taxes that each company would record as a result of the above facts for the year ended December 31, 2020?
Huey | Duey | Luey |
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