Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. on january 1, 2021, imbroglio co. leased equipment

On January 1, 2021, IMBROGLIO Co. leased equipment to COMPLICATION, Inc. Information on the lease...

80.2K

Verified Solution

Question

Accounting

On January 1, 2021, IMBROGLIO Co. leased equipment to COMPLICATION, Inc. Information on the lease is shown below:

 

Cost of equipment ? 1,200,000

Useful life of equipment 5 years

Lease term 4 years

Annual rent payable at the start of each year 400,000

Interest rate implicit in the lease 10%

 

Initial direct costs amounted to ?80,000. The lease qualifies for sales type lease accounting.


a) How much is the total interest income (finance income) to be recognized by IMBROGLIO over the lease term?

b)  How much is the gross investment in the lease on January 1, 2021?

c) How much is the net investment in the lease on January 1, 2021?

d)How much is the gross profit from the sale?

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students