The normal cash price for this type of equipment is 140000


On December 31, 2013, Perry Corporation Leased equipment to Admiral Company for a five-year period. The annual lease payment, excluding executory costs is $42,000.

The interest rate for this lease is 11% The payments are due on December 31 of each year. The first payment was made on December 31, 2013.

The normal cash price for this type of equipment is $140,000 while the cost to Perry was $109,000. For the year ended December 31, 2013, by what amount will Perry's pretax earnings increase from this lease?

Please show how you determined your answer.

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Accounting Basics: The normal cash price for this type of equipment is 140000
Reference No:- TGS01132600

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