ABC INCLeased Equipment to XYZ on January 1, 2013

question 34

Multiple Choice

ABC INC.leased equipment to XYZ on January 1, 2013.The lease is for a 9-year period expiring January 1, 2022.The first equal annual payment of $400,000 was made on January 1, 2013.The cash selling price of the equipment is $2,347,500, which is equal to the present value of the lease payments at 10 percent.ABC INC.had purchased the equipment for $2,100,000.The lease is appropriately recorded as a sales-type lease by ABC INC.What amount of interest income should ABC INC.record in 2013 as a result of the lease?

• A)$210,000
• B)$280,000
• C)$234,750
• D)$194,750

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