At the beginning of the year, a firm leased equipment on a capital lease, capitalizing $60,000 in its lease receivable account. The contract calls for December 31 payments of $15,000. The lessor's annual reporting period ends December 31 and the contract reflects 10% interest. The lessee made the first payment as required. The direct method statement of cash flows for the lessor should reflect which of the following in the first year of the lease contract (ignore noncash disclosures)?
A) $6,000 operating cash flow; $9,000 investing cash flow
B) $15,000 operating cash flow
C) $6,000 operating cash flow; $9,000 addition reconciling adjustment
D) $9,000 investing cash flow

Question

Quizplus · Accepted Answer

The $15,000 payment includes $6,000 interest (10% of $60,000) as operating cash flow and $9,000 principal as investing cash flow.

At the Beginning of the Year, a Firm Leased Equipment