Multiple Choice
Karla Salons leased equipment from Smith Co. on July 1, 2018, in a finance lease. The present value of the lease payments discounted at 10% was $80,000. Ten annual lease payments of $12,000 are due each year beginning July 1, 2018. Smith Co. had constructed the equipment recently for $66,000, and its retail fair value was $80,000.
-What amount of interest revenue from the lease should Smith Co. report in its December 31, 2018, income statement?
A) $12,000.
B) $4,000.
C) $3,400.
D) $5,000.
Correct Answer:
Verified
Correct Answer:
Verified
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