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What is the amount of gain or loss on the sale

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Question - On January 3, Year 1, Lasal Company leased a piece of equipment to Bettie's Bonnets over a 6-year period, which is equal to the equipment's useful life. The cost of the equipment on Lasal's accounting records is $23,500. Equal annual payments under the lease are $6,000, beginning on January 3, Year 1. The lease's implicit rate, which is not known to the lessee, is 7%. The lessee's incremental borrowing rate is 8%. The present value of an annuity due for 6 periods is:

5.100 at 7%

4.993 at 8%

What is the amount of gain or loss on the sale Lasal should record for the year ended December 31, Year 1?

A. $1,100

B. $6,458

C. $7,100

D. $12,500

Reference no: EM133177583

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