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Prepare an amortization schedule that would be suitable for the lessee for the lease term. (Round answers to 2 decimal places, e.g. 5,275.15.)

Prepare an amortization schedule that would be suitable for the lessee for the lease term. (Round answers to 2 decimal places, e.g. 5,275.15.)

FINANCIAL ACCOUNTING
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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Sandra Leasing Company signs an agreement on January 1, 2025, to lease equipment to Sage Hill Company. The following information relates to this agreement. 1. 2. 3. 4. 5. 6. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor tabe provided.) Date Prepare an amortization schedule that would be suitable for the lessee for the lease term. (Round answers to 2 decimal places, e.g. 5,275.15.) The term of the non-cancelable lease is 3 years with no renewal option. The equipment has an estimated economic life of 5 years. The fair value of the asset at January 1, 2025, is $85,000. 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 $7,000, none of which is guaranteed. 1/1/25 The agreement requires equal annual rental payments of $27,295.41 to the lessor, beginning on January 1, 2025. The lessee's incremental borrowing rate is 5%. The lessor's implicit rate is 4% and is unknown to the lessee. Sage Hill uses the straight-line depreciation method for equipment. 1/1/25 $ 1/1/26 1/1/27 Annual Lease Payment $ SAGE HILL COMPANY (Lessee) Lease Amortization Schedule Interest on Liability $ Reduction of Lease Liability $ Lease Liabili
Transcribed Image Text:Sandra Leasing Company signs an agreement on January 1, 2025, to lease equipment to Sage Hill Company. The following information relates to this agreement. 1. 2. 3. 4. 5. 6. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor tabe provided.) Date Prepare an amortization schedule that would be suitable for the lessee for the lease term. (Round answers to 2 decimal places, e.g. 5,275.15.) The term of the non-cancelable lease is 3 years with no renewal option. The equipment has an estimated economic life of 5 years. The fair value of the asset at January 1, 2025, is $85,000. 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 $7,000, none of which is guaranteed. 1/1/25 The agreement requires equal annual rental payments of $27,295.41 to the lessor, beginning on January 1, 2025. The lessee's incremental borrowing rate is 5%. The lessor's implicit rate is 4% and is unknown to the lessee. Sage Hill uses the straight-line depreciation method for equipment. 1/1/25 $ 1/1/26 1/1/27 Annual Lease Payment $ SAGE HILL COMPANY (Lessee) Lease Amortization Schedule Interest on Liability $ Reduction of Lease Liability $ Lease Liabili
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