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On June 30, 2018, Sandhill Co. sold equipment to an unaffiliated company for $2400000. The equipment...

On June 30, 2018, Sandhill Co. sold equipment to an unaffiliated company for $2400000. The equipment had a book value of $1280000 and a remaining useful life of 10 years. That same day, Sandhill leased back the equipment at $12800 per month for 5 years with no option to renew the lease or repurchase the equipment. Sandhill’s rent expense for this equipment for the year ended December 31, 2018, should be

$76800.
$102400.
$128000.
$307200.
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Answer #1

Sandhill’s rent expense for this equipment for the year ended December 31, 2018 is

July 2018 to December 2018 = 6 months

Monthly rent expense = $12800

Rent expense to be recorded for 6 months =

$12800 × 6 months = $76800

Therefore, the correct answer is option 1st, $76800

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