Lease agreement and annual year-end rentals

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Reference no: EM13139743

Alvin Company entered into a lease agreement with Theodore, Inc., to lease an asset that cost Alvin $120,000. The lease agreement requires five annual year-end rentals of $40,000 each. Alvin's implicit rate on the lease is 15 percent.

Alvin's dealer profit on this lease would be

A) $14,086 loss.

B) $14,086 gain.

C) $18,000 gain.

D) $80,000 gain.

Reference no: EM13139743

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