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What is the effect on cost of goods sold

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Question - Skor Co. leased equipment to Douglas Corp. on January 2, 2018 for an 8-year period expiring December 31, 2025. Equal payments under the lease are $600,000 and are due on January 2 of each year. The first payment was made on January 2, 2018. The cost of the equipment 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 effect on Cost of Goods Sold for the year ended December 31, 2018?

Reference no: EM132089168

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