A lease agreement that qualifies as a finance lease calls for annual lease payments of $24,000 over a four-year lease term (also the assets useful life), with the first payment at January 1, the beginning of the lease. The interest rate is 5%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required:

a. Determine the present value of the lease upon the lease's inception.

PV factors Based on (ie PV$, FV$, ect)
Table or calculator Function
Lease payment
n=
i=
PV of Lease

b. Create a partial amortization through the first payment on January 1, 2017.

Date	Lease Payment	Effective Interest	Decrease in Balance	Outstanding Balance
01/01/2016
01/01/2016
01/01/2017

c. If the lessees fiscal year is the calendar year, what would be the pretax amounts related to the lease that the lessee would report in its income statement for the first year ended December 31?

Impact on pretax income related to the lease:
Total Expenses