Reference no: EM133092443

Questions -

Q1. On August 1, 2021, DASHER Company leased a machine to SANTA Company for a 6-year period requiring payments of 100,000 at the end of each year. The machine cost 480,000, with an economic life of eight years and no residual value. DASHER's implicit interest rate is 10% and present value factors are as follows: Present value of annuity due of P1 at 10% for 6 periods - 4.791; Present value of an annuity of P1 at 10% for 8 periods - 5.868. DASHER recorded the lease as a direct financing lease. At the inception of the lease, how much should the gross lease receivable account balance be?

Q2. CUPID Corporation leased equipment to a lessee on April 1, 2021 for an eight-year period expiring April 1, 2029. Equal payments under the lease are 600,000 and are due on April 1 of each year. The first payment was made on April 1, 2021. The list selling price of the equipment is 3,520,000 and the carrying amount is 2,800,000. The lease is appropriately accounted for as a sales-type lease. The present value of the lease payments is 3,300,000. What is the amount of profit on the sale that should be reported for 2021?