Ajax Company manufactures equipment that they sell or lease. OnJanuary 1, 2019, Ajax leased equipment to Comet Company for afive-year period after which ownership of the leased asset will betransferred to Comet. The lease calls for equal annual payments of$50,000. The first payment is due on January 1, 2019. Thereafter,the payments are due on December 31st of each year with the secondpayment due on December 31, 2019. The equipment cost Ajax $176,000to produce. The implicit interest rate for the lease is 5½ percent.For the year ended December 31, 2019, what amount of total income(the sum of gross profit on the sale and interest income) relatedto this lease transaction should Ajax report?
Question 6 options:
| $9,639 |
| $58,897 |
| $61,647 |
| $49,258 |
kj. is the lessee under a finance lease with a provision topurchase the leased asset at the end of the lease term for abargain price. The depreciation (leased asset amortization) periodused by the kj must be
| either the term of the lease or the useful life of the leasedasset, whichever is shorter. |
| the term of the lease. |
| the useful life of the leased asset. |
| whatever depreciation period the lessor was using. |
