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Karla Salons leased equipment from Smith Co. on July 1, 2021, in a finance lease. The...

Karla Salons leased equipment from Smith Co. on July 1, 2021, in a finance lease. The present value of the lease payments discounted at 8% was $61,600. Ten annual lease payments of $8,500 are due each year beginning July 1, 2021. Smith Co. had constructed the equipment recently for $53,500, and its retail fair value was $61,600. What amount of interest revenue from the lease should Smith Co. report in its December 31, 2021, income statement? Multiple Choice $8,500. $3,080. $2,124. $4,928.

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Answer #1
Lease receivable at December 31,2021 53100 =61600-8500
X Interest rate 8%
X Fraction of year 6/12
Interest revenue in December 31,2021 2124 =53100*8%*6/12
Option C $2,124 is correct
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