Flounder Corporation entered into a lease agreement on January 1, 2020, to provide Pharoah Company with a piece of machinery The terms of the lease agreement were as follows. 1. The lease is to be for 3 years with rental payments of $11,933 to be made at the beginning of each year. The machinery has a fair value of $59,000, a book value of $40,000, and an economic life of 8 years. 2. 3. 4 5. 9 6. At the end of the lease term, both parties expect the machinery to have a residual value of $30,000, none of which is guaranteed. The lease does not transfer ownership at the end of the lease term, does not have a bargain purchase option, and the asset is not of a specialized nature. The implicit rate is 6%, which is known by Pharoah. Collectibility of the payments is probable. Click here to view factor tables Prepare the amortization schedules Pharoah will use over the lease term. PHAROAH COMPANY Lease Amortization Schedule Annuity-Due Basis Date Annual Payment Interest on Liability 1/1/20 1/1/20 $ 1/1/21 1/1/22 (A) Straight-Line Date Expense 1/1/20 12/31/20 $ 12/31/21 12/31/22 Reduction of Lease Liability Lease Liabi Lease Expense Schedule Interest on Lease Liability (C) Amortization of Right of Use Asset (and Liability) (A+B) Ri Prepare the amortization schedules Pharoah will use over the lease term. PHAROAH COMPANY Lease Amortization Schedule Annuity-Due Basis Interest Annual Payment on Liability S (A) Straight-Line Expense S $ Reduction of Lease Liability S Lease Expense Schedule (B) Interest on Lease Liability (C) Amortization of Right-of-Use Asset (and Liability) (A-B) $ $ Lease Liability Carrying Value of Right-of-Use Asset