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Determine the gain or loss and the rent expense

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On January 1, 2017, Indigo Co. sold equipment with an estimated useful life of 5 years. At the same time, Indigo leased back the equipment for 2 years under a lease classified as an operating lease. The sales price (fair value) of the equipment was $214,800, the carrying amount is $302,300, the monthly rental under the lease is $5,900, and the present value of the rental payments is $115,463.

Question 1: For the year ended December 31, 2017, determine which items would be reported on its income statement for the sale-leaseback transaction.

Question 2: Determine the gain or loss and the rent expense.

Reference no: EM132586342

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