Keefer Inc.uses leases as a means of selling its equipment.On January 1,2014,the company leased a machine to Jeremy Manufacturing Inc.The cost of the machine to Keefer was $78,450.The fair market value (which was the sales price)was $101,184 at the time of the lease.Annual lease payments are $13,500 and are payable in advance for 12 years.At the end of the lease term,title to the machine will pass to Jeremy Manufacturing.

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The Answer of Keefer Inc.uses leases as a means of selling its equipment.On January 1,2014,the company leased a machine to Jeremy Manufacturing Inc.The cost of the machine to Keefer was $78,450.The fair market value (which was the sales price)was $101,184 at the time of the lease.Annual lease payments are $13,500 and are payable in advance for 12 years.At the end of the lease term,title to the machine will pass to Jeremy Manufacturing.