7...new.e1..... Sage Industries and Pronghorn Inc. enter into an agreement that requires Pronghorn Inc. to build three diesel-electric engines to Sage’s specifications. Upon completion of the engines, Sage has agreed to lease them for a period of 10 years and to assume all costs and risks of ownership. The lease is non-cancelable, becomes effective on January 1, 2020, and requires annual rental payments of $405,443 each January 1, starting January 1, 2020. Sage’s incremental borrowing rate is 8%. The implicit interest rate used by Pronghorn and known to Sage is 7%. The total cost of building the three engines is $2,685,000. The economic life of the engines is estimated to be 10 years, with residual value set at zero. Sage depreciates similar equipment on a straight-line basis. At the end of the lease, Sage assumes title to the engines. Collectibility of the lease payments is probable. (e1) Prepare a lease amortization schedule for 2 years. (Round answers to 0 decimal places e.g. 58,971.) SAGE INDUSTRIES/PRONGHORN INCORPORATED Lease Amortization Schedule Date Annual Lease Receipt/Payment Interest on Receivable/Liability Reduction in Receivable/Liability Lease Receivable/ Liability 1/1/20 $ $ $ $ 1/1/20 1/1/21 1/1/22 Save for Later Attempts: 0 of 1 used Submit Answer (e2) The parts of this question must be completed in order. This part will be available when you complete the part above. (f) The parts of this question must be completed in order. This part will be available when you complete the part above. (g) The parts of this question must be completed in order. This part will be available when you complete the part above.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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(e1)

Prepare a lease amortization schedule for 2 years. (Round answers to 0 decimal places e.g. 58,971.)

SAGE INDUSTRIES/PRONGHORN INCORPORATED Lease Amortization Schedule
Date	Annual Lease Receipt/Payment	Interest on Receivable/Liability	Reduction in Receivable/Liability	Lease Receivable/ Liability
1/1/20	$	$	$	$
1/1/20
1/1/21
1/1/22

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(e2)

The parts of this question must be completed in order. This part will be available when you complete the part above.

(f)

The parts of this question must be completed in order. This part will be available when you complete the part above.

(g)

The parts of this question must be completed in order. This part will be available when you complete the part above.

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