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Compute the gross investment in the lease on january

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Reference no: EM133103466

Question - On January 1, 20x1, sofa Co. leased equipment to chair , Inc. Information on the lease isshown below.

Cost of equipment 697,370

Useful life of equipment 5 years

Lease term 4 years

Annual rent payable at the start of each year 200,000

Interest rate implicit in the lease 10%

Required -

a. Compute the gross investment in the lease on January 1, 20x1.

b. Compute the net investment in the lease on January 1, 20x1.

c. Compute the total interest income (finance income) to be recognized by Sofa over the lease term.

Reference no: EM133103466

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