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A company leased a tooling machine on January $1,$ Year $1,$ for a three$-$year period ending December $31,$ Year $3.$

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The lease agreement specified annual payments of $$36,000$ beginning with the first payment at the beginning of the lease, and each December $31$ through Year $2.$

The company had the option to purchase the machine on December $30,$ Year $3,$ for $$45,000$ when its fair value was expected to be $$60,000,$ a sufficient difference that exercise seems reasonably certain.

The machine's estimated useful life was six years with no salvage value. The company was aware that the lessor's implicit rate of return was $10\%.$

Note: Use tables, Excel, or a financial calculator. $($FV of $$1,$ PV of $$1,$ FVA of $$1,$ PVA of $$1,$ FVAD of $$1$ and PVAD of $$1)$

Required:

Calculate the amount the company should record as a right$-$of$-$use asset and lease liability for this finance lease.

Prepare an amortization schedule that describes the pattern of interest expense for the company over the lease term.

Prepare the appropriate entries for the company from the beginning of the lease through the end of the lease term.

Complete this question by entering your answers in the tabs below.

Required $1$

Required $2$

Required $3$

Prepare an amortization schedule that describes the pattern of interest expense for the company over the lease term.

Note: Round your intermediate and final answers to the nearest whole dollar amount. Enter all amounts as positive values.

$\backslash$table$[[$Lease Amortization Schedule$],[$Date$,$Payments,$\backslash$table$[[$Effective$],[$Interest$]],\backslash$table$[[$Decrease in$],[$Balance$]],\backslash$table$[[$Outstanding$],[$Balance$]]],[01/1/$Year $1],[\backslash$table$[[01/1/$Year $1],[\frac{01}{1}\frac{?}{?}$ Year $1]]],[\backslash$table$[[01/1/$Year $1],[\frac{12}{31}\frac{?}{?}$ Year $1]]],[\backslash$table$[[12/31/$Year $1],[\frac{12}{31}\frac{?}{?}$ Year $2]]],[\backslash$table$[[12/31/$Year $2],[\frac{12}{31}\frac{?}{?}$ Year $3]]],[$Total$,,,,]]$

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