Problem 21-01 (Part Level Submission)

The following facts pertain to a non-cancelable lease agreement between Faldo Leasing Company and Shamrock Company, a lessee.

Commencement date		January 1,
Annual lease payment due at the beginning of each year, beginning with January 1,		$125,660
Residual value of equipment at end of lease term, guaranteed by the lessee		$47,000
Expected residual value of equipment at end of lease term		$42,000
Lease term		6	years
Economic life of leased equipment		6	years
Fair value of asset at January 1,		$657,000
Lessors implicit rate		8	%
Lessees incremental borrowing rate		8	%

The asset will revert to the lessor at the end of the lease term. The lessee uses the straight-line amortization for all leased equipment.

Prepare an amortization schedule that would be suitable for the lessee for the lease term. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answers to 0 decimal places e.g. 5,275.)

SHAMROCK COMPANY (Lessee) Lease Amortization Schedule
Date		Annual Lease Payment Plus GRV		Interest on Liability		Reduction of Lease Liability		Lease Liability
1/1/20		$enter a dollar amount rounded to 0 decimal places		$enter a dollar amount rounded to 0 decimal places		$enter a dollar amount rounded to 0 decimal places		$enter a dollar amount rounded to 0 decimal places
1/1/20		enter a dollar amount rounded to 0 decimal places		enter a dollar amount rounded to 0 decimal places		enter a dollar amount rounded to 0 decimal places		enter a dollar amount rounded to 0 decimal places
1/1/21		enter a dollar amount rounded to 0 decimal places		enter a dollar amount rounded to 0 decimal places		enter a dollar amount rounded to 0 decimal places		enter a dollar amount rounded to 0 decimal places
1/1/22		enter a dollar amount rounded to 0 decimal places		enter a dollar amount rounded to 0 decimal places		enter a dollar amount rounded to 0 decimal places		enter a dollar amount rounded to 0 decimal places
1/1/23		enter a dollar amount rounded to 0 decimal places		enter a dollar amount rounded to 0 decimal places		enter a dollar amount rounded to 0 decimal places		enter a dollar amount rounded to 0 decimal places
1/1/24		enter a dollar amount rounded to 0 decimal places		enter a dollar amount rounded to 0 decimal places		enter a dollar amount rounded to 0 decimal places		enter a dollar amount rounded to 0 decimal places
1/1/25		enter a dollar amount rounded to 0 decimal places		enter a dollar amount rounded to 0 decimal places		enter a dollar amount rounded to 0 decimal places		enter a dollar amount rounded to 0 decimal places
12/31/26		enter a dollar amount rounded to 0 decimal places		enter a dollar amount rounded to 0 decimal places		enter a dollar amount rounded to 0 decimal places		enter a dollar amount rounded to 0 decimal places
		$enter a total amount		$enter a total amount		$enter a total amount

b. prepare all of the JE for the lessee for 2020 and 2021 to record the lease agreement, the lease paymeents, and all expenses related to this lease. Assume the lessee's annual accounting period ends on Dec. 31

c. Suppose Shamrock received a lease incentive of 5000 from Faldo leasing to enter the lease. How would the initial lease liability and right of use asset be affected? What if Vance prepaid rent of 5000 to Faldo?