The following facts pertain to a non-cancelable lease agreement between Faldo Le

Question

The following facts pertain to a non-cancelable lease agreement between Faldo Leasing Company and Carla Company, a lessee. Commencement date Annual lease payment due at the beginning of January 1, 2017 $119,947 $51,000 each year, beginning with January 1, 2017 Residual value of equipment at end of lease term, guaranteed by the lessee Expected residual value of equipment at end of lease term Lease term Economic life of leased equipment Fair value of asset at January 1, 2017 Lessor's implicit rate Lessee's incremental borrowing rate $46,000 6 years 6 years $631,000 8% 8% The asset will revert to the lessor at the end of the lease term. The lessee uses the straight-line amortization for all leased equipment. e rese ines the straight-line amortization for all tased equipment. Y (a) Prepare an amortization schedule that would be suitable for the lessee for the lease term. (Round present value factor calculations to5 places e.g. 5,275.) CARLA COMPANY (Lessee) Lease Amortization Schedule Annual Lease Payment Plus GRVLiability Interest on Reduction of Lease Liability Date Lease Liability

Explanation / Answer

Date Annual Lease payment Plus GRV Interest on Liability Reduction of lease liability Lease liability 01-01-2017 631000 01-01-2017 119947 119947 511053 01-01-2018 119947 40884.24 79062.76 431990.24 01-01-2019 119947 34559.2192 85387.7808 346602.4592 01-01-2020 119947 27728.19674 92218.80326 254383.6559 01-01-2021 119947 20350.69247 99596.30753 154787.3484 01-01-2022 119947 12382.98787 107564.0121 47223.33628 31-12-2022 51000 3777.866903 47222.1331 0 Total 770682 139683.2032 630998.7968

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