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How much interest revenue will Princess record

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Question - On January 1, 2021, Princess Corporation leased equipment to King Company. The lease term is 11 years. The first payment of $738,000 was made on January 1, 2021. The equipment cost Princess Corporation $5,094,191. The present value of the lease payments is $5,474,231. The lease is appropriately classified as a sales-type lease. Assuming the interest rate for this lease is 9%, how much interest revenue will Princess record in 2022 on this lease?

a. $394,714.

b. $426,261.

c. $311,739.

d. $398,204.

Reference no: EM132504005

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