Sarah Leasing Company signs an agreement on January to lease equipment to Kingbird Company. The following information relates to this agreement.
The term of the noncancelable lease is years with no renewal option. The equipment has an estimated economic life of years.
The fair value of the asset at January is $
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 $ none of which is guaranteed.
The agreement requires equal annual rental payments of $ to the lessor, beginning on January
The lessee's incremental borrowing rate is The lessor's implicit rate is and is unknown to the lessee.
Kingbird uses the straightline depreciation method for all equipment.
Click here to view factor tables.
For calculation purposes, use decimal places as displayed in the factor table provided.
a
Your answer is partially correct.
Prepare an amortization schedule that would be suitable for the lessee for the lease term. Round answers to decimal places, eg
KINGBIRD COMPANY Lessee
Lease Amortization Schedule
