On January 1, 2016, Stacie signed a lease agreement with Amy. Amy will use the equipment and make ten annual payments of $15,000 beginning December 31, 2016. The lease is considered to be a sales-type lease. When reading the Stacie income statement, you would expect to find which of the following accounts?

Question

Quizplus · Accepted Answer

In a sales-type lease, the lessor (Stacie, in this case) recognizes interest revenue over the lease term due to the interest component implicit in the lease payments. Rent revenue is recognized in operating leases, not sales-type leases. Rental expense and interest expense would be recognized by the lessee (Amy), not the lessor.

On January 1, 2016, Stacie Signed a Lease Agreement with Amy