Required 1 Required 2 Required 3 Prepare an amortization schedule that describes the pattern of interest expense for Federated over the lease term. (Round your intermediate and final answers to the nearest whole dollar amount. Enter all amounts as positive values.) Lease Amortization Schedule Outstanding Balance Effective Decrease in Date Payments Interest Balance 01/01/2021 $ 32,000 $ $ 32,000 12/31/2021 32,000 8,634 23,366 12/31/2022 32,000 6,297 25,703 (25,703) 12/31/2023 41,000 Total $ 137,000
Federated Fabrications leased a tooling machine on January 1, 2021, for a three-year period ending December 31, 2023. The lease agreement specified annual payments of $32,000 beginning with the first payment at the beginning of the lease, and each December 31 through 2022. The company had the option to purchase the machine on December 30, 2023, for $41,000 when its fair value was expected to be $56,000, a sufficient difference that exercise seems reasonably certain. The machine's estimated useful life was six years with no salvage value. Federated was aware that the lessor’s implicit
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