Hansaben Exercise 15-3 (Algo) Finance lease; lessee; balance sheet and income statement effects [LO15-2]On June 30, 2024, Georgia-Atlantic, Incorporated leased warehouse equipment from IC Leasing Corporation. The lease agreementcalls for Georgia-Atlantic to make semiannual lease payments of $403,067 over a five-year lease term, payable each June 30 andDecember 31, with the first payment on June 30, 2024, Georgia-Atlantic's incremental borrowing rate is 8%, the same rate IC uses tocalculate lease payment amounts. Amortization is recorded on a straight-line basis at the end of each fiscal year. The fair value of theequipment is $3.40 million.Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1. FVA of $1. PVA of $1. FVAD of $1 and PVAD of $1)Required:1. Determine the present value of the lease payments on June 30, 2024 that Georgia-Atlantic uses to record the right-of-use assetand lease liability2. What amount related to the lease would Georgia-Atlantic report in its balance sheet at December 31, 2024 (ignore taxes)?3. What amount related to the lease would Georgia-Atlantic report in its income statement for the year ended December 31, 2024(ignore taxes)?Note: For all requirements, enter your answers in whole dollars and not in millions. Round your final answers to the nearest wholedollar.1. Present value2. Pretax amount for liability2 Pretax amount for right-of-use asset3. Pretax amount for interest expense3. Pretax amount for amortization expense

Lease is a agreement between lessor and lessee where lessor allows lessee to use asset in exchange…

Exercise 15-3 (Algo) Finance lease; lessee; balance sheet and income statement effects [LO15-2] On June 30, 2024, Georgia-Atlantic, Incorporated leased warehouse equipment from IC Leasing Corporation. The lease agreement calls for Georgia-Atlantic to make semiannual lease payments of $403,067 over a five-year lease term, payable each June 30 and December 31, with the first payment on June 30, 2024 Georgia-Atlantic's incremental borrowing rate is 8%, the same rate IC uses to calculate lease payment amounts Amortization is recorded on a straight-line basis at the end of each fiscal year. The fair value of the equipment is $3.40 million. Note: Use tables, Excel, or a financial calculator. (FV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) Required: 1. Determine the present value of the lease payments on June 30, 2024 that Georgia-Atlantic uses to record the right-of-use asset and lease liability 2. What amount related to the lease would Georgia-Atlantic report in its balance sheet at December 31, 2024 (ignore taxes)? 3. What amount related to the lease would Georgia-Atlantic report in its income statement for the year ended December 31, 2024 (ignore taxes)? Note: For all requirements, enter your answers in whole dollars and not in millions. Round your final answers to the nearest whole dollar. 1. Present value 2. Pretax amount for liability 2 Pretax amount for right-of-use asset 3. Pretax amount for interest expense 3. Pretax amount for amortization expense

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter20: Accounting For Leases

Section: Chapter Questions

Problem 4P: Lessee Accounting Issues Timmer Company signs a lease agreement dated January 1, 2019, that provides...