Manufacturers Southern leased high-tech electronic equipment from Edison
Leasing on January 1, 2018. Edison purchased the equipment from International Machines at a cost of $127,650. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)
Related Information:Lease term2 years (8 quarterly periods)
Quarterly rental payments$16,800 at the beginning of each period
Economic life of asset2 years
Fair value of asset$127,650
Implicit interest rate6%(Also lessee's incremental borrowing rate)
Prepare a lease amortization schedule and appropriate entries for Manufacturers Southern from the beginning of the lease through January 1, 2019. Depreciation is recorded at the end of each fiscal year (December 31) on a straight-line basis.