A lease agreement that qualifies as a finance lease calls for annual lease payments of $30,000 over a five-year lease term (also the assets useful life), with the first payment on January 1, the beginning of the lease. The interest rate is 4%.

Required:

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

Create a partial amortization table through the second payment on January 1, Year 2.

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

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)