On December 31, 2013, Perry Corporation leased equipment to Admiral Company for a five-year period.The...
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Accounting
On December 31, 2013, Perry Corporation leased equipment to Admiral Company for a five-year period.The annual lease payment, excluding executory costs, is $40,000. The interest rate for this lease is 10%.The payments are due on December 31 of each year. The first payment was made on December 31, 2013.The normal cash price for this type of equipment is $125,000 while the cost to Perry was $105,000. Forthe year ended December 31, 2013, by what amount will Perry's pretax earnings increase from this lease? (Answer: 20,000)
*Please show the calculations!
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