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Teal Mountain Leasing Company signs a lease agreement on January 1, 2020, to lease electronic equipment to Sandhill Company. The term of the non-cancelable
Teal Mountain Leasing Company signs a lease agreement on January 1, 2020, to lease electronic equipment to Sandhill 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: 1. 2. Sandhill has the option to purchase the equipment for $19,500 upon termination of the lease. It is not reasonably certain that Sandhill will exercise this option. The equipment has a cost of $190,000 and fair value of $238,500 to Teal Mountain Leasing. The useful economic life is 2 years, with a residual value of $19,500. 3. Teal Mountain Leasing desires to earn a return of 5% on its investment. 4. Collectibility of the payments by Teal Mountain Leasing is probable.
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