The following facts pertain to a non-cancelable lease agreement between Sheridan Leasing Company and Skysong Company, a lessee. Commencement date Annual lease payment due at the beginning of each year, beginning with May 1, 2020 Bargain purchase option price at end of lease term Lease term Economic life of leased equipment Lessor's cost Fair value of asset at May 1, 2020 Lessor's implicit rate Lessee's incremental borrowing rate May 1, 2020 $15,349.90 $6,000 5 10 $65,000 $76,000 4 4 years years % % The collectibility of the lease payments by Sheridan is probable. Prepare a lease amortization schedule for Skysong for the 5-year lease term

The following facts pertain to a non-cancelable lease agreement between Sheridan Leasing Company and Skysong Company, a lessee. Commencement date Annual lease payment due at the beginning of each year, beginning with May 1, 2020 Bargain purchase option price at end of lease term Lease term Economic life of leased equipment Lessor's cost Fair value of asset at May 1, 2020 Lessor's implicit rate Lessee's incremental borrowing rate May 1, 2020 $15,349.90 $6,000 5 10 $65,000 $76,000 4 4 years years % % The collectibility of the lease payments by Sheridan is probable. Prepare a lease amortization schedule for Skysong for the 5-year lease term

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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Concept explainers

Leasing

Leasing is a contractual arrangement in which someone (a lessee) pays the owner (or lessor) of a building, land, vehicle, or other asset for the use of that asset. The lease is the agreement between lessee and lessor.

Question

The following facts pertain to a non-cancelable lease agreement between Sheridan Leasing Company
and Skysong Company, a lessee.
Commencement date
Annual lease payment due at the
beginning of
each year, beginning with May 1,
2020
Bargain purchase option price at
end of lease term
Lease term
Economic life of leased equipment
Lessor's cost
Fair value of asset at May 1, 2020
Lessor's implicit rate
Lessee's incremental borrowing rate
May 1,
2020
$15,349.90
$6,000
50
10
$65,000
$76,000
4
years
years
96
The collectibility of the lease payments by Sheridan is probable.
Prepare a lease amortization schedule for Skysong for the 5-year lease term

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