On January 1, 2018, Gary Corporation leased an equipment from Rafael Leasing Company. Rafael purchased the equipment from Rustam Equipment Inc. at a cost of $1,437,237. Garys borrowing rate for a similar transaction and the implicit discount rate is 10%. The lease agreement specified four annual payments of $300,000 beginning January 1, 2018, the beginning of the lease, and on each December 31 thereafter through 2020. The useful life of the equipment is estimated to be six years. Rafael will have alternative use for the equipment at the end of the lease term.

Accounting by the Lessee

Prepare an amortization schedule for the lease liability/obligation.