The following facts pertain to a noncancelable lease agreement between Sheffield Leasing Company and Tamarisk Company, a lessee.
Inception date: May 1, 2017 Annual lease payment due at the beginning of each year, beginning with May 1, 2017 $21,197.82 Bargain-purchase option price at end of lease term $4,200 Lease term 5 years Economic life of leased equipment 10 years Lessors cost $71,000 Fair value of asset at May 1, 2017 $91,000 Lessors implicit rate 10 % Lessees incremental borrowing rate 10 %
The collectibility of the lease payments is reasonably predictable, and there are no important uncertainties surrounding the costs yet to be incurred by the lessor. The lessee assumes responsibility for all executory costs.
Prepare a lease amortization schedule for Tamarisk Company for the 5-year lease term.