A lease agreement that qualifies as a finance lease calls for annual lease payments of $$40,000$ over a six$-$year lease term $($also the

asset's useful life$),$ with the first payment on January $1,$ the beginning of the lease. The interest rate is $7\%.$

Required:

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

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

c$.$ If the lessee's 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)$

Answer is complete but not entirely correct.

Complete this question by entering your answers in the tabs below.

If the lessee's 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: Round your answers to nearest whole number.