Crane Co. leased equipment to Union Co. on July 1, 2021, and properly recorded the sales-type lease at $144000, the present value of the lease payments discounted at 8%. The first of eight annual lease payments of $21500 due at the beginning of each year of the lease term was received and recorded on July 3, 2021. Crane had purchased the equipment for $113000. What amount of interest revenue from the lease should Crane report in its 2021 income statement

$4,900

Explanation:

Calculation to determine What amount of interest revenue from the lease should Crane report in its 2021 income statement

Interest revenue=8%/2*($144000 - $21500)

interest revenue=4%*$122,500

interest revenue = $4,900.

Therefore the amount of interest revenue from the lease should Crane report in its 2021 income statement is $4,900

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