Use this space or the white space below to show your work Req 26-2: Interest Req 2a, Capitalized Costs 20X1, Depreciation Expense 20X1 20X2 Solution Form, Requirement 2. XYZ Corp., as lessee, entered into a noncancellable lease on Jan 1, 20x1, under which it will lease equipment for five years having an economic life of six years. The equipment reverts to the lessor at the end of the lease term. The lease requires annual payments of $10,000, net of executory costs, beginning on Jan 1, 20x1. XYZ's incremental borrowing rate is 9%. XYZ follows US GAAP. Required: (a) Prepare a combined schedule to compute (1) the capitalized cost of the lease at its inception, and (2) straight-line depreciation for 20x1 (b) Compute interest expense for 20x1 and 20x2. An amortization schedule for the first two years is recommended. Circle all final answers. % PV PVAD 5 9 0.6499 4.2397 9 0.5963 4.8897 n 6