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Exercise 21A-6 a-b (Part Level Submission) Splish Brothers Leasing Company signs a lease agreement on...

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Exercise 21A-6 a-b (Part Level Submission) Splish Brothers Leasing Company signs a lease agreement on January 1, 2017, to lease electronic equipment to Sunland 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: Sunland has the option to purchase the equipment for $18,500 upon termination of the lease. It is not reasonably certain that Sunland will exercise this option. The equipment has a cost of $170,000 and fair value of $219,000 to Splish Brothers Leasing. The useful economic life is 2 years, with a residual value of $18,500 Splish Brothers Leasing desires to earn a return of 5% on its investment. Collectibility of the payments by Splish Brothers Leasing is probable. 1. 2. 3. 4

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