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On December 31, 2018, Perry Corporation leased equipment to Admiral Company for a five-year period....

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Accounting

On December 31, 2018, Perry Corporation leased equipment to Admiral Company for a five-year period. The annual lease payment, excluding non-lease components, is $47,000. The interest rate for this lease is 9%. The payments are due on December 31 of each year. The first payment was made on December 31, 2018. The normal cash price for this type of equipment is $165,000 while the cost to Perry was $144,000. For the year ended December 31, 2018, by what amount will Perry's earnings increase due to this lease (ignore taxes)?

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