Question
Blossom Steel Corporation, as lessee, signed a lease agreement for equipment for 5 years, beginning January 31, 2023. Annual rental payments of 45,000$ are to
Blossom Steel Corporation, as lessee, signed a lease agreement for equipment for 5 years, beginning January 31, 2023. Annual rental payments of 45,000$ are to be made at the beginning of each lease year (January 31). The insurance and repairs and maintenance costs are the lessee's obligation. The interest rate used by the lessor in setting the payment schedule 9%; Blossom's incremental borrowing rate is 10%. Blossom is unaware of the rate being used by the lessor. At the end of the lease, Blossom has the option to buy the equipment for 4,800$, which is considerably below its estimated fair value at the time. The equipment has an estimated useful life of seven years with no residual value. Blossom uses straight-line depreciation on similar equipment that it owns and allows IFRS.
Prepare the lease amortization schedule for the lease
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