On January 1, 2022, Confirm Company leased the equipment to Passenger Company for 4 years for a total cost of $560,000. At the end of the 4-year lease, the equipment was expected to have a residual value of $80,000, which was guaranteed by Passenger. The asset was originally purchased by Confirm for $400,000. The first lease payment was made immediately (1/1/22) and the remaining payments were made each December 31st. At the end of the lease the residual was determined to be worth $70,000, rather than the expected $80,000. Spreadsheet Requirements 1. Confirm's implicit rate of interest, on which payments are based, is 8% and is known by Passenger. Use the schedule on the sheet labeled Amortization to compute annual lease payments. (2 points) 2. On the sheet labeled Amortization, complete the lease amortization schedule. (4 points) 3. Insert amounts in the entries requested for the lessee and the lessor on the sheet labeled Entries by linking to amounts on the Amortization sheet. (4 points) 4. Insert amounts requested for the lessee's balance sheet on the sheet labeled Financial Statements by linking to amounts on the Amortization sheet. (3 points) 5. Insert amounts in the entries requested for the lessee and the lessor on the sheet labeled End of Lease by linking to amounts on the Amortization sheet. (2 points) Data: Value of equipment on date of lease 560,000 Original cost of equipment to Confirm Company 400,000 Expected residual value at end of 4 year lease Actual residual value at end of lease 80,000 70,000 Question 1 Question 2 Compute annual lease payments Amount to be recovered Less PV of residual Amount to be recovered with payments Annual Lease Payments Amounts Complete Lease Amortization Schedule for Lessee PVAORD 48% 3.31213 Interest rate 8% PVADUE PV$ 41,5% 4/89 3.5771 0.73503 Lease Term (years) 4 Decrease in Date Payment Interest (8%) Balance Outstanding Balance 1/1/2022 1/1/2022 12/31/2022 12/31/2023 12/31/2024 12/31/2025