The following facts pertain to a noncancelable lease agreement between Faldo Leasing Company and Vance Company, a lessee, for a computer system.

Inception date:	1-Jan-14
Lease term:	6 years
Economic life of lease equipment:	6 years
Fair value of asset at January 1, 2014:	542,000
Residual value of equipment at end of lease term, guaranteed by the lessee	51,000
Lessor's implicit rate:	11%
Lessee's incremental borrowing rate:	11%
Annual lease payment due at the beginning of each year, beginning with January 1, 2014	109,613

The Lessee assumes responsibility for all executory costs, which are expected to amount to $5,040 per year. The asset will revert to the lessor at the end of the lease term. The lessee has guaranteed the lessor a residual value of $51,000. The lessee uses the straight-line depreciation method for all equipment.

Prepare an amortization schedule that would be suitable for the lessee for the lease term.

The following amortization schedule has been prepared correctly for use by both the lessor and the lessee in accounting for this lease. The lease is to be accounted for properly as a capital lease by the lessee and as a direct-finance lease by the lessor.

	Date:	Annual lease Payment / Receipt:	Interest (12%) on Unpaid Liability / Receivable:	Reduction of Lease Liability / Receivable:	Balance of Lease Liability / Receivable:
	10/01/14
	10/01/14
	10/01/15
	10/01/16
	10/01/17
	10/01/18
	10/01/19