Forty-niners Corp., a private corporation that adheres to ASPE, is a manufacturer of truck trailers. On January 1, 2023, Forty-niners leased a fleet of trailers to Steelers Inc. under a six-year non-cancellable lease agreement. The following information about the lease and the trailers is provided:

1. Equal annual payments of $100,146 is due on January1 of each year of the lease term, to provide Forty-niners with an 8% return on their investment.

2. The title to the trailers will pass to Steelers at the end of the lease.

3. On January 1, 2023, the fleet of trailers is sold for $500,000 and the cost is $450,000. Each trailer has an expected useful life of nine years.

4. Collectability of the lease payments is reasonably assured, and any non-reimbursable costs under the lease that are likely to be incurred by Forty-niners can be reasonably estimated.

Instructions

a)Identify what type of lease this is for the Forty-niners, i.e., the lessor. Provide your reasons and justifications.b)Discuss briefly the sources of revenue that Forty-niners is expecting.