A lease agreement that qualifies as a finance lease calls forannual lease payments of $20,000 over a five-year lease term (alsothe asset’s useful life), with the first payment at January 1, thebeginning of the lease. The interest rate is 4%. (FV of $1, PV of$1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Useappropriate factor(s) from the tables provided.) Required: a.Complete the amortization schedule for the first two payments. b.If the lessee’s fiscal year is the calendar year, what would be theamount of the lease liability that the lessee would report in itsbalance sheet at the end of the first year? What would be theinterest payable?
