Question:
The Contra Corp leased equipment from Zelda Industries on January 1, 2013. Zelda purchased the equipment at a cost of $270,000.
Lease Term 3 Yrs
Annual Pmts $120,000 starting 1/1/13
Life of Asset 3 yrs
Implicit Rate 8%
Lessee's Incremental Rate 8%
Required:
1. Calculate the amount of dealer's profit that Zelda would recognize in this sales-type lease. Round to nearest dollar. Show calculations.
2. Prepare the appropriate entries for Zelda on January 1, 2013. Round to nearest dollar. Show calculations.
3. Prepare the appropriate entry for Zelda on December 31, 2013. Round to nearest dollar.