A company leases a piece of equipment to another company and appropriately records the 10 year lease as a sale. I have to determine the amount of profit to record in the first year - The lease payments are 500,000 for 10 years. The cost of the equipment is 2,675,000. The present value of a future annuity due (the lease payment is due at the first of the year) is 3,165,000. The list price for the equipment was 3,375,000. The lease starts July 1, 2004 - I'm looking for the amount of profit to record on December 31, 2004.

Question

A company leases a piece of equipment to another company and appropriately records the 10 year lease as a sale.  I have to determine the amount of profit to record in the first year - The lease payments are 500,000 for 10 years.  The cost of the equipment is 2,675,000.  The present value of a future annuity due (the lease payment is due at the first of the year) is 3,165,000.  The list price for the equipment was 3,375,000.  The lease starts July 1, 2004 - I'm looking for the amount of profit to record on December 31, 2004.