What type of lease is this to joey company

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Problem

Joey Co. leased equipment to Legoria Co. on April 1, 2017. The first of eight equal annual payments of $175,000 (excluding executory costs) was made on April 1, 2017. The Cost of the equipment to Joey Co. is $940,000. The Cash selling price is $1,026,900. Assume year end is 12/31.

Requirements:

1). What is Joey's desired rate of return on this lease?

2). What type of lease is this to Joey Co.?

3) Give the entry to record this lease on the books of Joey [4/1/17 to 4/1/2018] (Lease Amortization schedule should be prepared first)

4) How much income will Joey Co. recognize in 2017?

Reference no: EM131884693

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