The last two please. Harmeling Paint Ball (HPB) Corporation needs a new air compressor that costs $80,000. HPB will need it for only 5 years even though thecompressor's economic life is long enough so that the lease is an operating lease. The firm can lease the compressor for 5 years with $40,000lease payments at the end of each year. HPB's cost of debt is 11%. Answer the following questions. (Hint: See Table 19-1.)a. What is the initial lease liability that must be reported on the balance sheet? Do not round intermediate calculations. Round your answer tothe nearest cent. Enter your answer as a positive value.$147,835.88b. What is the initial right-of-use asset? Do not round intermediate calculations. Round your answer to the nearest cent.$147,835.88c. What will HPB report as the Year-1 lease expense? Round your answer to the nearest cent. Enter your answer as a positive value.$40,000d. What is the Year-1 imputed interest expense? Do not round intermediate calculations. Round your answer to the nearest cent. Enter youranswer as a positive value.$16,261.96e. What lease liability must be reported at Year 1? Do not round intermediate calculations. Round your answer to the nearest cent. Enter youranswer as a positive value.124,098.0f. What right-of-use asset must be reported at Year 1? Do not round intermediate calculations. Round your answer to the nearest cent.$124,098 TABLE 19-1Financial Reporting for LeasesPart 1: Preliminary CalculationsYear 0Year 1Year 2Year 3Lease liability balance$26,730$18,334$9,434$0Imputed interest expense$1,604$1,100$566Lease payment$10,000$10,000$10,000Part 2: Reporting an Operating LeaseYear 0Year 1Year 2Year 3Lease liability balance$26,730$18,334$9,434$0Right-of-use asset balance$26,730$18,334$9,434$0Lease expense"$10,0000,000$10,000Part 3: Reporting a Finance LeaseYear 0Year 1Year 2Year 3Lease liability balance$26,730$18,334$9,434$0Right-of-use asset balance$26,730$17,820$8,910$0Interest expenseAmortization expense$1,604$1,100$566$8.910$8,910$8,910Total lease expense$10,514$10,010$9,476

Working Note#1 Year 1 2 3 4 5 Total Annual lease installment paid at the end of each year ($)…

Answered: 2$ 16,261.96 e. What lease liability…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 1P

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