The following facts pertain to a non$-$cancelable lease agreement between Sheridan Leasing Eompany and Skysong Company, a lessee. Your answer is correct.

Discuss the nature of this lease to Skysong.

The nature of this lease to Skysong is a

lease.

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List of Accounts Question $3$ of $6$

$($b$)$

Your Answer Correct Answer

Your answer is correct.

Discuss the nature of this lease to Sheridan.

The nature of this lease to Sheridan is a

lease.

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Solution

List of Accounts Prepare a lease amortization schedule for Skysong for the $5-$year lease term. $($Round answers to $2$ decimal places, eg$.5,275\mathrm{.}15.)$Sayment Plus

BPO

Interest on

Liability

$

$

$

$

Reduction of Lease

Liability

L$$ase Liability

$

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Commencement date

Annual lease payment due at the beginning of

each year, beginning with May $1,2025$

Bargain purchase option price at end of lease term

Lease term

Economic life of leased equipment

Lessor's cost

Fair value of asset at May $1,2025$

Lessor's implicit rate

Lessee's incremental borrowing rate

May $1,2025$

$$19,656\mathrm{.}69$

$$7,000$

$5$ years

$10$ years

$$65,000$

$$93,000\mathrm{.}10$

$6\%$

$6\%$

The collectibility of the lease payments by Sheridan is probable.

Click here to view factor tables.

$($For calculation purposes, use $5$ decimal places as displayed in the factor table provided.$)$