Laporte Engineering Company leased a machine on January 1, 2020, under a contract calling for four annual payments of $170,000 on December 31, 2020 through 2023. The machine becomes the property of the lessee after the fourth payment. The machine was predicted to have a service life of six years and no residual value, and the interest rate available to Laporte Engineering was 11% on the day the lease was signed. The machine was delivered on January 10, 2020, and was immediately placed in service.

Required: 1. Determine the initial net liability created by the lease and the cost of the leased asset. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar.) Initial amount of the net liability 2. Prepare a table showing the calculation of the amount of interest expense allocated to each year the lease is in effect and the carrying amount of the liability at the end of each of those years. (Do not round intermediate calculations. Round the final answers to nearest whole dollar. Enter all the amounts as positive values.) Payments Year Beginning Net Liability Payment Interest Expense Reduction in Lease Liabili Lease Liability at End of Yea 2020 2021 2022 2023 Cotal expense $ 1 > Record signing of lease agreement. te: Enter debits before credits. General Journal Debit Credit Date Jan 01, 2020 Record the depreciation on leased machinery. lote: Enter debits before credits. General Journal Debit Credit Date Dec 31, 2021 Record the annual lease payment. ote: Enter debits before credits. General Journal Debit Credit Date Dec 31, 2021 LAPORTE ENGINEERING COMPANY Partial Balance Sheet December 31, 2021 Property, plant and equipment Current liabilities Non-current liabilities