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

Commencement date		May 1, 2020
Annual lease payment due at the beginning of
each year, beginning with May 1, 2020		$15,349.90
Bargain purchase option price at end of lease term		$6,000
Lease term		5	years
Economic life of leased equipment		10	years
Lessors cost		$65,000
Fair value of asset at May 1, 2020		$76,000
Lessors implicit rate		4	%
Lessees incremental borrowing rate		4	%

The collectibility of the lease payments by Sheridan is probable.

Discuss the nature of this lease to Skysong. The nature of this lease to Skysong is a operatingsales-typefinance lease.

Discuss the nature of this lease to Sheridan. The nature of this lease to Sheridan is a financesales-typeoperating lease.

Prepare a lease amortization schedule for Skysong for the 5-year lease term.