1. Create a excel sheet showing amounts, interest rates and account balances related to leasing.

Show calculation for 36 months

this is a type of example

Instead of buying the asset outright, the company enters into a lease with Borat Corp., a Canadian finance company that special asset-based financing. The facts are shown in Exhibit 18-1. EXHIBIT 18-1 LEASE TERMS BASIC EXAMPLE The fair value of the asset is $66,000. The lease begins on 1 January 20X2. . The initial lease term (a noncancellable period for which the lessee has contracted to lease the asset) is three years. The economic life of the asset is eight years. Payments over the initial lease term are $20,000 per year, payable at the beginning of each lease year (i.e., on 1 January 20X2, 20X3, a . At the end of the initial lease term, the lease is renewable for another two years at Lessee's option for $5,000 per year. Assume that the . Lessee is responsible for insuring and maintaining the equipment. The asset reverts to the lessor at the end of the lease. The lessee does not expect to make any payments for residual value guarantees. . Lessee does not know the lessor's implicit rate of interest in the lease. Lessee's incremental borrowing rate is 8%. Lessee uses the straight-line method to depreciate similar assets based on number of months available for use. . There are legal costs incurred by Lessee directly related to the lease arrangement of $4.000. Page 1249 In this example, the important elements for analysis are as follows: 3 EXHIBIT 18-2 LEASE LIABILITY AMORTIZATION TABLE Lease Payment Interest at 8% Balance January 1, 20X2 $43,310 December 31, 20X2 $3,465 $46.775 January 1, 20X3 $20,000 $26.775 December 31, 20X3 $ 2.142 $28.917 January 1, 20X4 $20,000 $8.917 December 31, 20X4 $ 713 $ 9,630 January 1, 20X5 $ 5.000 $ 4,630 December 31, 20X5 $ 370 $ 5.000 January 1, 20X6 $ 5,000 $ December 31, 20X6 $ On December 31, 20X2. the interest has to be accrued Exhibit 18-2 shows that interest is $3.465 (i... $43.310 x 8%). This is added to