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What amount would the lessor report in its income statement

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Question - Hearts Inc. (Lessor) enters into a 10-year lease of equipment with Spades Inc. (Lessee) on January 1, 2020. Hearts Inc. sells and leases the equipment, which is not specialized in nature and is expected to have alternative use to Hearts Inc. at the end of the 10-year lease term. Under the lease, Hearts Inc. receives annual lease payments of $27,000, payable at the beginning of each year. Lessor expects no residual value of the equipment at the end of the 10-year lease term. The equipment has an estimated remaining economic life of 11 years, a carrying amount of $180,000, and a fair value of $207,000. Hearts Inc. incurred and paid costs of $3,600 for a broker's commission as a result of obtaining the lease. The rate implicit in the lease is 6.4632%. What amount would the lessor report in its income statement (ignoring taxes) for the year ended December 31, 2020?

Reference no: EM133143571

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