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Prepare a lease amortization schedule for Rode Company

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Reference no: EM132468565

Problem - The following facts pertain to a non-cancelable lease agreement between Mooney Leasing Company and Rode Company, a lessee.

Inception date - May 1, 2014

Annual lease payment due at the beginning of each year, beginning with May 1, 2014 - $20,020.26

Bargain-purchase option price at end of lease term - $3,990.00

Lease term - 5 years

Economic life of leased equipment - 10 years

Lessor's cost - $69,500.00

Fair value of asset at May 1, 2014 - $84,500.00

Lessor's implicit rate - 11%

Lessee's incremental borrowing rate - 11%

The collectability 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.

Required - Prepare a lease amortization schedule for Rode Company for the 5-year lease term.

Reference no: EM132468565

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