Question
SHOW CALCULATIONS On January 1, 2020, Damon Co. leased a machine to Clooney Co. for 10 years, with $20,000 payments due at the beginning of
SHOW CALCULATIONS
On January 1, 2020, Damon Co. leased a machine to Clooney Co. for 10 years, with $20,000 payments due at the beginning of each year effective at the inception of the lease. The machine cost Damon $110,000. The lease is appropriately accounted for as a sales-type lease by Damon. The present value of the 10 rent payments over the lease term discounted appropriately at 10% was $135,200. How much interest income should Damon record from the lease for the year ended December 31, 2020?
a. $11,520.
b. $13,520.
c. $14,040.
d. $11,000.
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Managerial Accounting
Authors: Ray Garrison, Eric Noreen, Peter Brewer
16th edition
1259307417, 978-1260153132, 1260153134, 978-1259307416
