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Question
1. Five payments of $26,379.74 (a 9% implicit rate) due at the end each year.2. The fair value of the tractor is $100,000.
3. The lease is nonrenewable and the tractor reverts to Star at the end of the lease term.
4. The tractor has a six-year economic life.
5. Hatfield has an excellent credit rating.
6. Star offers no warranty on the tractor other than the manufacturer's two-year warranty that is handled directly with the manufacturer.
The difference in the lessor's income recognition over the life of the lease, between an operating lease and a capital lease is
A. zero.
B. the amount of the interest revenue.
C. the financing revenue minus the depreciation.
D. the depreciation expense.
Answer
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