15. Karla Salons leased equipment from Smith Co. on July 1, 2021, in a finance lease. The present value of the lease payments discounted at 10% was $81,100. Ten annual lease payments of $12,000 are due each year beginning July 1, 2021. Smith Co. had constructed the equipment recently for $66,000, and its retail fair value was $81,100. What amount of interest revenue from the lease should Smith Co. report in its December 31, 2021, income statement

$3,455

Explanation:

The interest received by Smith can be calculated as;

Interest Value = Present value of lease payment * interest rate

Present Value of interest rate

Ten annual lease payments of $12,000 are due each year beginning July 1, 2021.

That means first payment has been made already. Present value is;

= 81,100 - 12,000

= $69,100

Only half a year has gone by so this will need to be reflected;

Interest Value = Present value of lease payment * interest rate

= 69,100 * 10% * 6/12

= $3,455

cognitive overload: having a lot on your mind impairs decision-making and tends to result in the simplest, but not necessarily best, option being selected.

empathy gaps: overlooking how you might feel in a different situation can result in unnecessary purchases, such as overbuying when shopping for food on an empty stomach.

optimism and overconfidence: wearing rose-tinted glasses and having unrealistic expectations about the future can affect money management and leave you unprepared for a change in circumstance.

instant gratification: seeking instant gratification drives impulsive spending and can undermine long-term planning and savings.

harmful habits: automatic or mindless behaviour can amplify a poor financial decision as it becomes a recurring event.

social norms: we are heavily influenced by the actions of others; while this can be in certain circumstances, it also contributes to the pressure to keep up with the joneses through conspicuous consumption.

answer decisions made by individual households and firms;