A finance lease agreement calls for quarterly lease payments of $5,376 over a 10-year lease term, with the firstpayment on July 1, the beginning of the lease. The annual interest rate is 8%. Both the present value of the leasepayments and the cost of the asset to the lessor are $150,000. What would be the amount of interest expense thelessee would record in conjunction with the second quarterly payment on October 1? What would be the amountof interest revenue the lessor would record in conjunction with the second quarterly payment on October 1?

A finance lease agreement calls for quarterly lease payments of $5,376 over a 10-year lease term, with the firstpayment on July 1, the beginning of the lease. The annual interest rate is 8%. Both the present value of the leasepayments and the cost of the asset to the lessor are $150,000. What would be the amount of interest expense thelessee would record in conjunction with the second quarterly payment on October 1? What would be the amountof interest revenue the lessor would record in conjunction with the second quarterly payment on October 1?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter20: Accounting For Leases

Section: Chapter Questions

Problem 9RE: Use the information in RE20-3. Prepare the journal entries that Richie Company (the lessor) would...

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Use the information in RE20-3. Prepare the journal entries that Garvey Company would make in the first year of the lease assuming the lease is classified as a finance lease. Assume that Garvey is required to make payments on December 31 each year.
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