FINANCIAL ACCOUNTING
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ISBN: 9781259964947
Author: Libby
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Transcribed Image Text:Laura Leasing Company signs an agreement on January 1, 2020, to lease equipment to Tamarisk 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.
Tamarisk uses the straight-line depreciation method for all equipment.
Click here to view factor tables.
(For calculation purposes, use 5 decimal places as displayed in the factor table provided.)
(a)
Prepare an amortization schedule that would be suitable for the lessee for the lease term. (Round answers to O decimal places, e.g.
5,265.)
Date
1/1/20
$
1/1/20
TAMARISK COMPANY (Lessee)
Lease Amortization Schedule
Annual Lease
Payment
Interest on
Liability
Reduction of Lease
Liability
Lease Liabilit
SUPPORT
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