Equipment upon termination of the lease

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Exercise 21-4 Swifty Leasing Company signs a lease agreement on January 1, 2017, to lease electronic equipment to Nash 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. Nash Company has the option to purchase the equipment upon termination of the lease.

2. The equipment has a cost and fair value of $149,000 to Swifty Leasing Company. The useful economic life is 2 years, with a salvage value.

3. Nash Company is required to pay $4,500 each year to the lessor for executory costs.

4. Swifty Leasing Company desires to earn a return of on its investment.

5. Collectibility of the payments is reasonably predictable, and there are no important uncertainties surrounding the costs yet to be incurred by the lessor.

Reference no: EM132745142

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