Ruth Leasing Company signs an agreement on January 1, 2025, to lease equipment to Splish Brothers Company. The following information relates to this agreement. 1 2 4. 5. 6. The term of the non-cancelable lease is 3 years with no renewal option. The equipment has an estimated economic life of 5 years. The fair value of the asset at January 1, 2025, is $88,000. 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 $7,000, none of which is guaranteed. The agreement requires equal annual rental payments of $28,334.88 to the lessor, beginning on January 1, 2025. The lessee's incremental borrowing rate is 5%. The lessor's implicit rate is 4% and is unknown to the lessee. Splish Brothers uses the straight-line depreciation method for all equipment. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Your answer is partially correct. Prepare an amortization schedule that would be suitable for the asses for the lease term. (Round answers to 2 decimal places, eg 5275.15.) Annual Lease Payment [ 22:00 SEPAK CEREA (86CCE

9 SPLISH BROTHERS COMPANY (Lessee) Lease Amortization Schedule Interest on Liability 10 Reduction of Lease Liability Dateu Lease Liabili

Puth Lezaina Company sizns an zersement on January 1, 2025, to lezse squipment to Splish Brothers Company. The following information relates to this ageement. 1. The term of the non-cancelable lease is 3 years with no reneval option. The equipment has an estimated economic lifs of 5 yearz. 2. The fair value of the azset at January 1,2025, is $89,000. 3. The assat 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 $7,000, none of which is muarantesd. 4. The agreem ent requires equal annual rental payments of $28,334,88 to the lassor, beginning on January 1,2025. 5. The lessed's incremental borrowing rate is 5%. The lessor's implicit rate is 4% and is unknown to the lessee. 6. Splish Erothers uses the straight-line depreciation method for all equipment: Click here to view factor tables. (For colculation purposes, use 5 decimal ploces as disployed in the foctor toble provided.) (a) Your answar is partial y correct. 527515t