Peg Co. leased equipment from Howe Corp. on July 1, 2016, for an eight-year period expiring June 30, 2024. Equal payments under the lease are $600,000 and are due on July 1 of each year. The first payment was made on July 1, 2016. The rate of interest contemplated by Peg and Howe is 10%. The cash selling price of the equipment is $3,520,000, and the cost of the equipment on Howes accounting records is $2,800,000. The lease is appropriately recorded as a sales-type lease. What is the amount of profit on the sale and interest revenue that Howe should record for the year ended December 31, 2016?

Options are as follows:

Profit on Sale

Interest Revenue

$ 45,000

$146,000

$ 45,000

$176,000

$720,000

$146,000

$720,000

$176,000