Question
Pearl Leasing Company signs a lease agreement on January 1, 2017, to lease electronic equipment to Martinez Company. The term of the noncancelable lease is
Pearl Leasing Company signs a lease agreement on January 1, 2017, to lease electronic equipment to Martinez 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. Martinez Company has the option to purchase the equipment upon termination of the lease. 2. The equipment has a cost and fair value to Pearl Leasing Company. The useful economic life is 2 years, with a salvage value of $17,200. 3. Martinez Company is required to pay $5,400 each year to the lessor for executory costs 4. Pearl Leasing Company desires to earn a return of 10% on its investment. 5. Collectibility of the payments is reasonably predictable, and there are no importan surrounding the costs yet to be incurred by the lessor t uncertainties
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