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Zhang Company leased equipment from Mann Industries. The lease agreement qualifies as a finance lease...

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Accounting

Zhang Company leased equipment from Mann Industries. The lease agreement qualifies as a finance lease and requires annual lease payments of $53,750 over a five-year lease term (also the assets useful life), with the first payment on January 1, the beginning of the lease. The interest rate is 6%. The asset being leased cost Mann $190,000 to produce.

1. Determine the price at which the lessor is selling the asset (present value of the lease payments).

2. What would be the amounts related to the lease that the lessor would report in its income statement for the year ended December 31 (ignore taxes)?

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