(solution) On January 1, 2014, Sondgeroth Co. sold equipment with an

(solution) On January 1, 2014, Sondgeroth Co. sold equipment with an

On January 1, 2014, Sondgeroth Co. sold equipment with an estimated useful life of 5 years. At the same time, Sondgeroth leased back the equipment for 2 years under a lease classified as an operating lease. The sales price (fair value) of the equipment was $218,870, the carrying amount is $298,170, the monthly rental under the lease is $5,670, and the present value of the rental payments is $119,225. For the year ended December 31, 2014, determine which items would be reported on its income statement for the sale-leaseback transaction.