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  3. at january 1,2022, caf med leased restaurant equip

At January 1,2022, Caf Med leased restaurant equipment from Crescent Corporation under a nine-year lease...

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Accounting

At January 1,2022, Caf Med leased restaurant equipment from Crescent Corporation under a nine-year lease agreement. The lease agreement specifies annual payments of $30,000 beginning January 1,2022, the beginning of the lease, and at each December 31 thereafter through 2030. The equipment was acquired recently by Crescent at a cost of $225,000(its fair value) and was expected to have a useful life 12 years with no salvage value at the end of its life. Crescent seeks a 12% return on its lease investments. By this arrangement, the lease is deemed to be an operating lease.
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