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Make amount of interest income should be recognized

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On January 1, 2021, Oceanic Company is engaged in leasing equipment. Such an equipment was delivered to a lessee at the beginning of current year under a direct financing lease with the following provisions:

Cost of Equipment 3,778,500.00

Unguaranteed Residual Value 300,000.00

Useful Life 6.00

Lease Term 8.00

Implicit Interest Rate 10%

Incremental Borrowing Rate 12%

PV of Annuity in Advance for 6 yrs. @ 10% 4.79

PV of Annuity in Advance for 6 yrs. @ 12% 4.60

PV of 1 for 6 yrs @ 10% 0.62

PV of 1 for 6 yrs @ 12% 0.57

Problem 1. total financial revenue under this transaction

Problem 2. amount of interest income should be recognized for 2022

Problem 3. carrying amount of lease receivable as of December 31, 2022

Reference no: EM133005823

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