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On January 1, 2016, Princess Corporation leased equipment to King Company. The lease term is 11 years. The first payment of $724,000 was made on January 1, 2016. The equipment cost Princess Corporation $4,332,600. The present value of the minimum lease payments is $4,652,600. The lease is appropriately classified as a sales-type lease. Assuming the interest rate for this lease is 13%, how much interest revenue will Princess record in 2017 on this lease?

On January 1, 2016, Princess Corporation leased equipment to King Company. The lease term is 11 years. The first payment of $724,000 was made on January 1, 2016. The equipment cost Princess Corporation $4,332,600. The present value of the minimum lease payments is $4,652,600. The lease is appropriately classified as a sales-type lease. Assuming the interest rate for this lease is 13%, how much interest revenue will Princess record in 2017 on this lease?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 2016, Princess Corporation leased equipment to King Company. The lease term is 11 years. The first payment of $724,000 was made on January 1, 2016. The equipment cost Princess Corporation $4,332,600. The present value of the minimum lease payments is $4,652,600. The lease is appropriately classified as a sales-type lease. Assuming the interest rate for this lease is 13%, how much interest revenue will Princess record in 2017 on this lease?
Transcribed Image Text:On January 1, 2016, Princess Corporation leased equipment to King Company. The lease term is 11 years. The first payment of $724,000 was made on January 1, 2016. The equipment cost Princess Corporation $4,332,600. The present value of the minimum lease payments is $4,652,600. The lease is appropriately classified as a sales-type lease. Assuming the interest rate for this lease is 13%, how much interest revenue will Princess record in 2017 on this lease?
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