Create a lease amortization schedule for Sweet Company

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Question - The following facts pertain to a non-cancelable lease agreement between Indigo Leasing Company and Sweet Company, a lessee.

Inception date: May 1, 2017Annual lease payment due at the beginning of each year, beginning with May 1, 2017 $20,198.56 Bargain-purchase option price at end of lease term$3,600Lease term5 years Economic life of leased equipment10yearsLessor's cost$72,000Fair value of asset at May 1, 2017$85,000Lessor's implicit rate11%Lessee's incremental borrowing rate11%

The collectibility of the lease payments is reasonably predictable, and there are no important uncertainties surrounding the costs yet to be incurred by the lessor. The lessee assumes responsibility for all executory costs. The expected residual value of the equipment at the end of 5 (10) years is $12,000 ($0).

Create a lease amortization schedule for Sweet Company for the 5-year lease term.

Reference no: EM132546776

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