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1. Prepare bare trees company's amortization schedule for the lease liability. Round the amount of the initial lease liability at January 1, 20X1, to the nearest dollar. Round all amounts in the amortization table to the nearest cent.

2. Determine interest and depreciation expense

3. assume that at the end of the lease term, the leased asset will be worth $16,000. what is the gain or loss?

4. assume that at the end of the lease term, the leased asset will only be worth $12,000. what is the gain or loss ?

P13-5 Accounting for lessee finance lease including executory costs and residual value guarantee (LO 13-4) On January 1, 20X1, Bare Trees Company signed a three-year noncancelable lease with Dreams Inc. The lease calls for three payments of $62,258.09 to be made at each year-end. The lease payments include $3,000 of executory costs related to service. The lease is nonrenewable and has no bargain purchase option. Ownership of the leased asset reverts to Dreams at the end of the lease period, at which time Bare Trees has guaranteed that the leased asset will be worth at least $15,000. The leased asset has an expected useful life of four years, and Bare Trees uses straight- line depreciation for financial reporting purposes. Bare Trees's incremental borrowing rate is 9%

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