Lease

On 1/1/14 you lease equipment. The term of this capital lease is 3 years.

It is non-cancelable.

The payments of $32,500 are to be made at the beginning of each year.

The guaranteed residual value is $6,000.

The fair market value of this equipment on 1/1/14 is $95,000.

The estimated economic life of the equipment is 5 years.

You use the straight-line method to record depreciation.

The lessor set the payments to earn a 9% return.

You are aware of the lessor