Lease of refrigerators .JJI entered into a contract with Carlin's Inc. for the use of heayy-duty refrigerators. The refrigerators will be used by .JJI in its juice bars to store the fresh ingredients used for its juices. Once .JJI has received the refrigerators, .JJI will then set them up for its purposes and put them into use in the business. The refrigerators are used solely by MT for its operations. The term is for six years and the estimated useful life of the refrigerators is nine years. Annual lease payments of $211311) are to be made at the beginning of each year and are expensed by .JJi. The interest rate implicit in the contract is loss. At the end of the lease. .JJI has the option of purchasing the refrigerators for fair market yalue. Although not written in the lease, JJI has indicated to Carlin's Inc. that it does plan to purchase the refrigerators. As per the lease agreementr a $2o.ooo penalty is payable to I:Iarlin's Inc. if the purchase option is not exercised