Question 1 Larkspur Leasing Company signs an agreement on January 1, 2017, to lease equipment to Madison Company. The following information relates to this agreement. 1. The term of the non-cancelable lease is 7 years with no renewal option. The equipment has an estimated economic life of 7 years. 2. The cost of the asset to the lessor is $320,000. The fair value of the asset at January 1, 2017, is $320,000. 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 $9,000, none of which is guaranteed. 4. The agreement requires equal annual rental payments, beginning on January 1, 2017 5. Collectibility of the lease payments by Larkspur is probable. Assuming the lessor desires a 10% rate of return on its investment, calculate the amount of the annual rental payment required. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and the final answer to O decimal places e.g. 5,275.) Amount of the annual rental payment s Prepare an amortization schedule that is suitable for the lessor for the lease term. (Round answers to O decimal places e.g.5,275.) LARKSPUR LEASING COMPANY (Lessor) Lease Amortization Schedule Annual Lease Payment Plus URV Interest on Lease Receivable Recovery of Lease Receivable Date Lease Receivable 1/1/20 1/1/21 1/1/22 1/1/23 12/31/23