Blossom Leasing Company leases a new machine to Crane Corporation. The machine has a cost of $65,000 and fair value of $85,000. Under the 3-year, non-cancelable contract, Crane will receive title to the machine at the end of the lease. The machine has a 3-year useful life and no residual value. The lease was signed on January 1, 2025. Blossom expects to earn an 8% return on its investment, and this implicit rate is known by Crane. The annual rentals are payable on each December 31, beginning December 31, 2025. Click here to view factor tables. (b) Prepare an amortization schedule that would be suitable for both the lessor and the lessee and that covers all the years involved. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to O decimal places e.g. 5,275.) Date Rent Receipt/Payment 1/1/25 12/31/25 12/31/26 12/31/27 Interest (8%) Revenue/ Expense Reduction of Principal Receivat

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 3P
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Blossom Leasing Company leases a new machine to Crane Corporation. The machine has a cost of $65,000 and fair value of $85,000.
Under the 3-year, non-cancelable contract, Crane will receive title to the machine at the end of the lease. The machine has a 3-year
useful life and no residual value. The lease was signed on January 1, 2025. Blossom expects to earn an 8% return on its investment, and
this implicit rate is known by Crane. The annual rentals are payable on each December 31, beginning December 31, 2025.
Click here to view factor tables.
(b)
Prepare an amortization schedule that would be suitable for both the lessor and the lessee and that covers all the years involved.
(For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to O decimal places e.g.
5,275.)
Date
Rent Receipt/Payment
1/1/25
12/31/25
12/31/26
12/31/27
Interest (8%) Revenue/
Expense
Reduction of Principal
Receivat
Transcribed Image Text:Blossom Leasing Company leases a new machine to Crane Corporation. The machine has a cost of $65,000 and fair value of $85,000. Under the 3-year, non-cancelable contract, Crane will receive title to the machine at the end of the lease. The machine has a 3-year useful life and no residual value. The lease was signed on January 1, 2025. Blossom expects to earn an 8% return on its investment, and this implicit rate is known by Crane. The annual rentals are payable on each December 31, beginning December 31, 2025. Click here to view factor tables. (b) Prepare an amortization schedule that would be suitable for both the lessor and the lessee and that covers all the years involved. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to O decimal places e.g. 5,275.) Date Rent Receipt/Payment 1/1/25 12/31/25 12/31/26 12/31/27 Interest (8%) Revenue/ Expense Reduction of Principal Receivat
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