Exhibit 21-5 The Chicago, Inc.entered into a five-year lease with the Urbana Company on January 1, 2010.Chicago, the lessor, will require that five equal annual payments of $25, 000 be made at the beginning of each year.The first payment will be made on January 1, 2010.The lease contains a bargain purchase option price of $12, 000, which the lessee may exercise on December 31, 2014.The lessee pays all executory costs.The cost of the leased property and its normal selling price are $95, 000 and $118, 236, respectively.Collectibility of the future lease payments is reasonably assured, and the lessor does not expect to incur any future costs related to the lease.Present value factors for a 7% interest rate are as follows:
- Refer to Exhibit 21-5.If Chicago requires a 7% annual return, what is the correct amount of interest revenue to be recognized by Chicago for 2010? (Round the answer to the nearest dollar.)
A) $7, 774
B) $7, 175
C) $6, 527
D) $5, 928
Correct Answer:
Verified
Q83: Any initial direct costs incurred by the
Q84: Exhibit 21-5 The Chicago, Inc.entered into
Q85: Exhibit 21-4 On January 1, 2010,
Q86: Which of the following is a required
Q87: Depreciation expense will be recorded in
Q89: If a lessor has an account, Equipment
Q90: Exhibit 21-4 On January 1, 2010,
Q91: Exhibit 21-5 The Chicago, Inc.entered into
Q92: Which of the following amortization policies is
Q93: The lessor should report the Lease Receivable
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