Please provide the correct answer, and I will make sure to like your response.For calculation purposes, use 5 decimal places Laura Leasing Company signs an agreement on January 1, 2020, to lease equipment to Shamrock Company. The following information relates to this agreement.1. The term of the non-cancelable lease is 3 years with no renewal option. The equipment has an estimated economic life of 5 years.2. The fair value of the asset at January 1, 2020, is $74,000.3. 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 $3,000, none of which is guaranteed.4. The agreement requires equal annual rental payments of $24,716 to the lessor, beginning on January 1, 2020.5. The lessee’s incremental borrowing rate is 5%. The lessor’s implicit rate is 4% and is unknown to the lessee.6. Shamrock uses the straight-line depreciation method for all equipment. (a)Prepare an amortization schedule that would be suitable for the lessee for the lease term. (Round answers to 0 decimal places, e.g. 5,265.)SHAMROCK CcOMPANY (Lessee)Lease Amortization ScheduleAnnual LeaseInterest onReduction of LeaseDatePaymentLiabilityLiabilityLease Liability1/1/20$$1/1/201/1/211/1/22

Investment is the amount which is spent by the producer for the purchase of those goods which…

Answered: The term of the non-cancelable lease is…

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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Please provide the correct answer, and I will make sure to like your response.

For calculation purposes, use 5 decimal places

Laura Leasing Company signs an agreement on January 1, 2020, to lease equipment to Shamrock Company. The following information relates to this agreement.

1.		The term of the non-cancelable lease is 3 years with no renewal option. The equipment has an estimated economic life of 5 years.
2.		The fair value of the asset at January 1, 2020, is $74,000.
3.		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 $3,000, none of which is guaranteed.
4.		The agreement requires equal annual rental payments of $24,716 to the lessor, beginning on January 1, 2020.
5.		The lessee’s incremental borrowing rate is 5%. The lessor’s implicit rate is 4% and is unknown to the lessee.
6.		Shamrock uses the straight-line depreciation method for all equipment.

(a)
Prepare an amortization schedule that would be suitable for the lessee for the lease term. (Round answers to 0 decimal places, e.g. 5,265.)
SHAMROCK CcOMPANY (Lessee)
Lease Amortization Schedule
Annual Lease
Interest on
Reduction of Lease
Date
Payment
Liability
Liability
Lease Liability
1/1/20
$
$
1/1/20
1/1/21
1/1/22

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