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Jacobsen Leasing Company leases a new machine that has a cost and fair value of $75,000 to Stadler Corporation on a 3-year noncancelable contract. Stadler Corporation agrees to assume all risks of normal ownership including such costs as insurance, taxes, and maintenance. The machine has a 3-year useful life and no residual value. The lease was signed on January 1, 2011. Jacobsen Leasing Company expects to earn a 9% return on its investment. The annual rentals are payable on each December 31.

(a) Compute the annual lease payments rounded to the nearest dollar.

(b) Complete the amortization schedule that would be suitable for both the lessor and the lessee and that covers all the years involved.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M973109

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