What is the amount of profit on the sale

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Question - Carla Vista Co. leased equipment from Koenig Co. on july 1, 2021 for an 8 year period expiring June 30, 2029 equal annual payments under the lease are $795,000 and are due on July 1 of each year. The first payment was made on July 1, 2021. The rate of interest contemplated by Carla vista and Koenig is 8%. The lease receivable before the first payment is $4,934,000 and the cost of the equipment on Koenig's accounting records was $4,350,000. Assuming that the lease is appropriately recorded as a sale for accounting purposes by Koenig, what is the amount of profit on the sale and the interest income that Koenig would record for the year ended December 31, 2021?

Reference no: EM132784462

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