Questionon 20th february 2012 hooke inc purchased a machine

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Reference no: EM13350104

Question:

On 20^th February, 2012, Hooke Inc., purchased a machine for $1,221,600 for the purpose of leasing it. The machine is expected to have a 10-year life, no residual value, and may be depreciated on the straight-line basis. The machine was leased to Sage Company on March 1, 2012, for a 4-year period at a monthly rental of $17,100. There is no provision for the renewal of the purchase or lease of the machine by the lessee at the expiration of the lease term. Hooke paid $30,816 of commissions associated with negotiating the lease in February 2012:

(a) What expense could Sage Company record as a result of the facts above for the year ended 31^st December, 2012?

Rent Expense

(b) What income or loss before income taxes should Hooke record as a result of the facts above for the year ended 31^st December, 2012?

Income from lease before taxes

Reference no: EM13350104

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