Dowell leased the warehouses on December 31. The five-year lease agreement called for Dowell to make quarterly lease payments of $2,503,303, payable each December 31, March 31, June 30, and September 30, with the first payment at the lease's beginning. As a finance lease, Dowell had recorded the right-of-use asset and liability at $40 million, the present value of the lease payments at 10%. Dowell records amortization on a straight-line basis at the end of each fiscal year.

Today, Dowell's controller, explained a proposal to sublease the underused warehouses to American Tankers, Incorporated, for the remaining four years of the lease term. American Tankers would be substituted as lessee under the original lease agreement. As the new lessee, it would become the primary obligor under the agreement, and Dowell would not be secondarily liable for fulfilling the obligations under the lease agreement.

Complete this question by entering your answers in the tabs below. Req 1 to 3 Req 4 1. On December 31, 2025, what is the balance in Dowell's lease liability? Note: Round your answer to the nearest whole dollar amount. 2. On December 31, 2025, what is the carrying amount [after accumulated amortization} of Dowell's leased warehouses? Note: Round your answer to the nearest whole dollar amount. 3. Obtain the relevant authoritative literature on accounting for derecognition of finance leases by lessees using the FASB's Codification Research System. You might gain access from the FASB website (www.fasb.org), from your school library, or some other source. To determine the appropriate accounting treatment for the proposed sublease, what is the specific seven digit Codification citation (XXXXXXX) that Dowell would rely on to determine: a. If the proposal will qualify as a termination of a finance lease? b. The appropriate accounting treatment for the sublease? Show less A. Dowell's lease liability Carrying amount of leased warehouses Complete this question by entering your answers in the tabs below. Req 1 to 3 Req 4 What, if any, journal entry would Dowell record in connection with the sublease? Note: If no entry is required for a transaction/event, select \"No journal entry required" in the first account field. Enter your answers in whole dollars View hansacon list Journal entry worksheet Record the sublease of warehouses for the remaining four years of lease term. Note: Enter debits before credits. Complete this question by entering your answers in the tabs below. Req 1 to 3 Reg 4 What, if any, journal entry would Dowell record in connection with the sublease? Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars View transaction list Journal entry worksheet 2 Description Note: Enter debits before credits. Transaction General Journal Debit Credit 2