tion, determine the appropriate lease classification by the lessee and indicate why. Situations 1 2 3 4 Lease terms (years) 4 4 4 4 Asset's useful life (years) 6 5 6 6 Asset's fair value $ 44,000 $ 45,000 $ 41,000 $ 38,500 Purchase option that is reasonably certain to be exercised? No Yes No No Annual lease payments Beginning of Year End of Year Beginning of Year End of Year Lessor's implicit rate (known by lessee) 5% 6% 5% 6% Lesse's incremental borrowing rate 5% 5%

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Gadubhai

The following facts pertain to a non-cancelable lease agreement between Cullumber Leasing Company and Crane Company, a lessee. Commencement date Annual lease payment due at the beginning of each year, beginning with January 1, 2025 Residual value of equipment at end of lease term, guaranteed by the lessee January 1, 2025 $125,377 $54,000 Expected residual value of equipment at end of lease term $49,000 Lease term 6 years Economic life of leased equipment 6 years Fair value of asset at January 1, 2025 $660,000 Lessor's implicit rate 8 % Lessee's incremental borrowing rate 8 % 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. Click here to view factor tables. (a) Prepare an amortization schedule that would be suitable for the lessee for the lease term. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answers to O decimal places e.g. 5,275.) Date 1/1/25 $ 1/1/25…