Cullumber Company leases a building to Crane, Inc. on January $1,2025.$ The following facts pertain to the lease agreement.

The lease term is $4$ years, with equal annual rental payments of $$4,641$ at the beginning of each year.

Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and the asset is not of a specialized nature.

The building has a fair value of $$19,100,$ a book value to Cullumber of $$5,730,$ and a useful life of $5$ years.

At the end of the lease term, Cullumber and Crane expect there to be an unguaranteed residual value of $$3,400.$

Cullumber wants to earn a return of $8\%$ on the lease, and collectibility of the payments is probable. This rate is known by Crane.

Cullumber's Joumal Entries

Crane's Joumal Entries

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