At January 1,2021, Tom leased restaurant equipment from Linda Corporation under a five-year lease agreement in a finance lease.The lease agreement specifies annual payments of $50,000

beginning January 1,2021, the beginning of the lease, and at each December 31 thereafter through 2024. The equipment was acquired recently by Linda at a cost of $240,000 and was expected to have a

useful life of six years with no salvage value at the end of its life. Linda seeks a 4% return on its lease investments. The present value of five payments at a discount rate of 4% is $231,495.

Based on the above fact, answer the following questions:

1.What amount related to the lease should Tom report in its income statement for the year ended December 31,2021?

2.What is the balance of lease liability that Tom will report in its balance sheet at December 31, 2021?

3.What is the balance of right-of-use asset that Andy will report in its balance sheet at December 31, 2021?