The following facts pertain to a non-cancelable lease agreement between Faldo Leasing Company andBuffaloCompany, a lessee.

Commencement dateJanuary 1,Annual lease payment due at the beginning of

each year, beginning with January 1,$110,269 Residual value of equipment at end of lease term,

guaranteed by the lessee$46,000Expected residual value of equipment at end of lease term$41,000Lease term6yearsEconomic life of leased equipment6yearsFair value of asset at January 1,$622,000Lessor's implicit rate5%Lessee's incremental borrowing rate5%

The asset will revert to the lessor at the end of the lease term. The lessee uses the straight-line amortization for all leased equipment.

(a)

explain and show hoe to prepare an amortization schedule that would be suitable for the lessee for the lease term.