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Question 9 of 9 View Policies Current Attempt in Progress Crane plc leases...

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Accounting

Question 9 of 9
View Policies
Current Attempt in Progress
Crane plc leases a building to Walsh Ltd. on January 1,2022. The following facts pertain to the lease agreement.
The lease term is 5 years, with equal annual rental payments of 5,925 at the beginning of each year.
Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and the asset is not of a specialized nature.
The building has a fair value of 28,979, a book value to Crane of 20,160, and a useful life of 6 years.
At the end of the lease term, Crane and Walsh expect there to be an unguaranteed residual value of 5,040.
Crane wants to earn a return of 8% on the lease, and collectibility of the payments is probable. This rate is known by Walsh.
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