Question

The following facts pertain to a noncancelable lease agreement between Culver Leasing Company and Larkspur Company, a lessee. Inception date: May 1, 2017 Annual lease payment due at the beginning of    each year, beginning with May 1, 2017 $23,007.91 Bargain-purchase option price at end of lease term $4,400 Lease term 5 years Economic life of leased equipment 10 years Lessor’s cost $68,000 Fair value of asset at May 1, 2017 $97,000 Lessor’s implicit rate 11 % Lessee’s incremental borrowing rate 11 % 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). Click here to view factor tables

(c) Prepare a lease amortization schedule for Larkspur Company for the 5-year lease term. (Round present value factor calculations to 5 decimal places, e.g. 1.25126 and Round answers to 2 decimal places, e.g. 15.25.) LARKSPUR COMPANY (Lessee) Lease Amortization Schedule Date Annual Lease Payment Plus BPO Interest on Liability Reduction of Lease Liability Lease Liability 5/1/17 $ $ $ $ 5/1/17 5/1/18 5/1/19 5/1/20 5/1/21 4/30/22 $ $ $

Answer 1