A lease agreement that qualifies as a finance lease calls for annual lease payments of $60,000 over a eight-year lease term (also the assets useful life), with the first payment at January 1, the beginning of the lease. The interest rate is 4%. The lessors fiscal year is the calendar year. The lessor manufactured this asset at a cost of $400,000. (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 price at which the lessor is selling the asset (present value of the lease payments). b. Create a partial amortization table through the second payment on January 1, 2017. c. What would be the increase in earnings that the lessor would report in its income statement for the year ended December 31, 2016 (ignore taxes)?

Required A Required B Required C Create a partial amortization table through the second payment on January 1, 2017. (Enter all amounts as positive values. Round your answers to nearest whole number.) Date Lease Payment Effective Interest Decrease in Balance 01/01/2016 Outstanding Balance $ 420,123 360,123 314,528 $ $ 0 $ 01/01/2016 01/01/2017 60,000 60,000 60,000 45,595 14,405 Complete this question by entering your answers in the tabs below. Required A Required B Required C Determine the price at which the lessor is "selling" the asset (present value of the lease payments). (Round your answers to nearest whole number and round percentage answer to 1 decimal place.) PV factors based on Table or Calculator function: PVAD of $1 Lease Payment 60,000 8 n = i = 4.0% PV of Lease $ 420,123 Complete this question by entering your answers in the tabs below. Required A Required B Required C What would be the increase in earnings that the lessor would report in its income statement for the year ended December 31, 2016 (ignore taxes)? (Input decreases to income as negative amounts. Round your answers to nearest whole number.) Pretax impact on income related to the lease: Interest revenue $ 14,405 Cost of goods sold Total pretax impact on income (400,000) -385,595 $