Exercise 21-4

Windsor Leasing Company signs a lease agreement on January 1, 2017, to lease electronic equipment to Sheridan 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. Sheridan Company has the option to purchase the equipment for $16,600 upon termination of the lease. 2. The equipment has a cost and fair value of $163,000 to Windsor Leasing Company. The useful economic life is 2 years, with a salvage value of $16,600. 3. Sheridan Company is required to pay $5,200 each year to the lessor for executory costs. 4. Windsor 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.

Exercise 21-4 Your answer is partially correct. Try agein. Windsor Leasing Carmpany signs a lease agreement an Jaruary 1, 2017, to lease electronic equipment ta Sheridan Company. The terrm of the roncancelable lease is 2 years, and payments are required at the end of each year. The following information relates to this 1. Sheridan Company has the aptian to purchase the equipment for $16,800 upon termination of the lease 2. The equipment has a cost and fair value of $163,000 to Windsor Leasing Company. The useful economic life is 2 years, with a salvage value or 16,600 Sheridan Company is required to pay $5,200 each year to the lessar far executory costs 4, Windsor Leasing Company desires to earn a return of 10% on its investment. S. Collectibility of the payments is reasanably p and there are no important uncertainties surrounding the casts yet to be incurred by the lessor. Chere ane sment. ncurred