Problem:
On December 31, 2003, Focus Corporation leased equipment to Kansas Company for a 5-year period. The annual lease payment, excluding executory costs is $80,000. The interest rate for this lease is 10%. The payments are due on December 31 of each year. The first payment was made on December 31, 2003. The normal cash price for this type of equipment is $250,000 while the cost to Focus was $210,000. For the year ended December 31, 2003, by what amount will Focus's pretax eamings increase from this lease?