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Tucson Fruits leased farm equipment from Barr Machinery on July 1,2016. The lease was recorded...

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Accounting

Tucson Fruits leased farm equipment from Barr Machinery on July 1,2016. The lease was recorded as a sales-type lease. The present value of the lease payments discounted at 10% was $40.5 million. Ten annual lease payments of $6 million are due at the beginning of each year beginning July 1,2016. Barr had purchased the equipment for $33 million. What amount of interest revenue from the lease should Barr report in its 2016 income statement?
A) $2,025,000
B) $1,725,000
C) $1,650,000
D) $0

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