Question: UMB leased a Cloud Computing equipment from Academy Leasing Services on January l, 2020. Academy Leasing Services paid $3,500,000 for the equipment, which is equal

UMB leased a Cloud Computing equipment from Academy Leasing Services on January l, 2020. Academy Leasing Services paid $3,500,000 for the equipment, which is equal to its fair value. Terms of the lease agreement and related information are as below.

Lease term: 4 years

Lease payments: $ 978,447 at the beginning of each year

Economic life of asset: 4 years

Annual interest rate: 8%

Required:

a. Prepare an amortization schedule that shows the pattern of interest expense for UMB during the lease term.

b. Prepare the appropriate journal entries for 2020 for UMB to record the lease.

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