Skysong Leasing Company signs a lease agreement on January $1,2025,$ to lease electronic equipment to Sheridan Company. The term of the non$-$cancelable lease is $2$ years, and payments are required at the end of each year. The following information relates to this agreement.

Sheridan has the option to purchase the equipment for $$18,500$ upon termination of the lease. It is not reasonably certain that Sheridan will exercise this option.

The equipment has a cost of $$160,000$ and fair value of $$189,000$ to Skysong Leasing. The useful economic life is $2$ years, with a residual value of $$18,500.$

Skysong Leasing desires to earn a return of $6\%$ on its investment.

Collectibility of the payments by Skysong Leasing is probable.