Castle Leasing Company signs a lease agreement on January 1, 2017, to lease electronic equipment to...

Castle Leasing Company signs a lease agreement on January 1, 2017, to lease electronic equipment to Jan Way Company. The term of the non-cancelable lease is 2 years, and payments are required at the end of each year. The following information relates to this agreement:

1. Jan Way has the option to purchase the equipment for $16,000 upon termination of the lease. It is not reasonably certain that Jan Way will exercise this option.

2. The equipment has a cost of $120,000 and fair value of $160,000 to Castle Leasing. The useful economic life is 2 years, with a residual value of $16,000.

3. Castle Leasing desires to earn a return of 5% on its investment.

4. Collectibility of the payments by Castle Leasing is probable.

Expert Solution

ekkarill92 answered 1 year ago

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