Amazon leased equipment from United Machines on July 1, 2020, in a finance lease. The present value of the lease payments discounted at 10% was $82,000. Ten annual lease payments of $12,000 are due each year beginning July 1, 2020. United Machines had constructed the equipment recently for $66,000. How much related interest revenue will United Machines record for the year ending December 31, 2020

$3,500

Explanation:

A payment of $12,000 had been made on the 1st of July already so the lease value would have reduced to;

= 82,000 - 12,000

= $70,000

Interest on this is;

= 10% * 70,000

= $7,000

However, only half a year have passed yet the $7,000 is for a year so by the accrual principle only the insurance for half a year should be recognized;

= 70,000 * 6/12 months

= $3,500

answer; hazards;

forbearance of student loan payments. under forbearance, your loan payments are postponed (or reduced) but interest continues to accrue during the period of forbearance. if you don't pay the interest during that period, the interest may be “capitalized,” which means it is added to your principal balance.