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Assuming that Crane exercises its option to purchase the equipment on December 31, 2021, prepare...

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Accounting

Assuming that Crane exercises its option to purchase the equipment on December 31, 2021, prepare the journal entry to record the sale on Larkspur Leasings books

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Larkspur Leasing Company signs a lease agreement on January 1, 2020, to lease electronic equipment to Crane 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. Crane has the option to purchase the equipment for $21,000 upon termination of the lease. It is not reasonably certain that Crane will exercise this option. The equipment has a cost of $220,000 and fair value of $259,000 to Larkspur Leasing. The useful economic life is 2 years, with a residual value of $21.000. Larkspur Leasing desires to earn a return of 5% on its investment. Collectibility of the payments by Larkspur Leasing is probable. 3. 4

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