Accounting MCQ
Accounting Chapter 15
Tucson Fruits leased farm equipment from Barr Machinery on July 1, 2016. The lease was recorded as a sales-type lease. The present value of the lease payments discounted at 10% was $40.5 million. Ten annual lease payments of $6 million are due at the beginning of each year beginning July 1, 2016. Barr had purchased the equipment for $33 million. What amount of interest revenue from the lease should Barr report in its 2016 income statement?
Tucson Fruits leased farm equipment from Barr Machinery on July 1, 2016. The lease was recorded as a sales-type lease. The present value of the lease payments discounted at 10% was $40.5 million. Ten annual lease payments of $6 million are due at the beginning of each year beginning July 1, 2016. Barr had purchased the equipment for $33 million. What amount of interest revenue from the lease should Barr report in its 2016 income statement?
Tucson Fruits leased farm equipment from Barr Machinery on July 1, 2016. The lease was recorded as a sales-type lease. The present value of the lease payments discounted at 10% was $40.5 million. Ten annual lease payments of $6 million are due at the beginning of each year beginning July 1, 2016. Barr had purchased the equipment for $33 million. What amount of interest revenue from the lease should Barr report in its 2016 income statement?
A) $2,025,000
B) $1,725,000
C) $1,650,000
D) $0
Answer: B
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