Castle Leasing Company signs a lease agreement on January 1, 2014, to lease electronic equipment to Jan Way Company. The term of the noncancelable 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 $15,800 upon termination of the lease.
2.		The equipment has a cost and fair value of $144,400 to Castle Leasing Company. The useful economic life is 2 years, with a salvage value of $15,800.
3.		Jan Way Company is required to pay $5,290 each year to the lessor for executory costs.
4.		Castle Leasing Company desires to earn a return of 10% on its investment.
5.		Collectibility of the payments is reasonably predictable, and there are no important uncertainties surrounding the costs yet to be incurred by the lessor.