A lease agreement that qualifies as a finance lease calls for annual lease payments of $$40,000$ over a six$-$year lease term $($also the

asset's useful life$),$ with the first payment on January $1,$ the beginning of the lease. The interest rate is $7\%.$

Required:

a$.$ Complete the amortization schedule for the first two payments.

b$.$ If the lessee's fiscal year is the calendar year, what would be the amount of the lease liability that the lessee would report in its

balance sheet at the end of the first year? What would be the interest payable?

Note: Use tables, Excel, or a financial calculator. $($FV of $$1,$ PV of $$1,$ FVA of $$1,$ PVA of $$1,$ FVAD of $$1$ and PVAD of $$1)$

Complete this question by entering your answers in the tabs below.

If the lessee's fiscal year is the calendar year, what would be the amount of the lease liability that the lessee would report in

its balance sheet at the end of the first year? What would be the interest payable?

Note: Round your answers to the nearest whole dollar.

Lease liability

Interest payable