Question $9$ of $9$

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Crane plc leases a building to Walsh Ltd$.$ on January $1,2022.$ The following facts pertain to the lease agreement.

The lease term is $5$ years, with equal annual rental payments of $5,925$ at the beginning of each year.

Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and the asset is not of a specialized nature.

The building has a fair value of $28,979,$ a book value to Crane of $20,160,$ and a useful life of $6$ years.

At the end of the lease term, Crane and Walsh expect there to be an unguaranteed residual value of $5,040.$

Crane wants to earn a return of $8\%$ on the lease, and collectibility of the payments is probable. This rate is known by Walsh.