Question

Laura Leasing Company signs an agreement on January 1, 2017, to lease equipment to Skysong Company. The following information relates to this agreement.

1.		The term of the non-cancelable lease is 3 years with no renewal option. The equipment has an estimated economic life of 5 years.
2.		The fair value of the asset at January 1, 2017, is $56,000.
3.		The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of $3,000, none of which is guaranteed.
4.		The agreement requires equal annual rental payments of $18,479 to the lessor, beginning on January 1, 2017.
5.		The lessee’s incremental borrowing rate is 5%. The lessor’s implicit rate is 4% and is unknown to the lessee.
6.		Skysong uses the straight-line depreciation method for all equipment.

Prepare an amortization schedule that would be suitable for the lessee for the lease term. (Round answers to 0 decimal places, e.g. 5,265.)

SKYSONG COMPANY (Lessee) Lease Amortization Schedule
Date		Annual Lease Payment		Interest on Liability		Reduction of Lease Liability		Lease Liability
1/1/17		$		$		$		$
1/1/17
1/1/18
1/1/19
		$		$		$

Answer 1

Answer: