Oakridge Leasing Corporation signs an agreement on January 1, 2020, to lease equipment to Pharoah Limited. Oakridge and Pharoah follow ASPE. The following information relates to the agreement. 1. The term of the non-cancellable lease is five years, with no renewal option. The equipment has an estimated economic life of six years. 2. The assets fair value at January 1, 2020, is $87,600. 3. The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of $6,500, which is not guaranteed. 4. Pharoah Limited assumes direct responsibility for all executory costs, which include the following annual amounts: $990 to Rocky Mountain Insurance Ltd. for insurance and $1,710 to James Township for property taxes. 5. The agreement requires equal annual rental payments of $20,040 to Oakridge, the lessor, beginning on January 1, 2020. 6. The lessees incremental borrowing rate is 11%. The lessors implicit rate is 10% and is known to the lessee. 7. Pharoah Limited uses the straight-line depreciation method for all equipment. 8. Pharoah uses reversing entries when appropriate.

Calculate the PV of the future minimum lease payments using any of the following methods: (1) factor tables, (2) a financial calculator, or (3) Excel functions

Prepare an amortization schedule for Pharoah Limited for the lease term. (Hint: You may find the ROUND formula helpful for rounding in Excel.)

Show the dollar amounts that Oakridge, the lessor, used to arrive at the lease payment amount of $20,040. (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275.)

Fair market value of leased asset to lessor		$enter a dollar amount
Less: PV of unguaranteed residual value		enter a dollar amount
Amount to be recovered through lease payments		$enter a total amount
Five periodic lease payments		$enter the Five periodic lease payments in dollars