Lease Accounting. On January 1, Moran Inc. entered into a noncancelable 10 -year lease for computer equipment with a fair value of $120 million and requiring annual $16.304 milion year-end lease payments. The companys year-end is December 31. The implicit interest rate is 6%. Required 1. Assuming that the lease is accounted for as a finance lease, what financial effects will be recorded in the financial statements with regard to the lease on January 1? Note: Use Excel and round to the nearest million (i.e. show 128.543 as 129) A Finance lease asset and a finance lease liability will be capitalized on the balance sheet for: $Answer million. 2. Assuming that the lease is accounted for as a finance lease, what financial effects will be recorded with regard to the lease on December 31 (at the end of the first year)? Note: Round all entries to three decimal points. Use rounded amounts in any further calculations.

Item	Increase/Decrease
Cash	IncreaseDecrease		million
Interest expense	IncreaseDecrease		million
Lease obligation	IncreaseDecrease		million
Amortization expense	IncreaseDecrease		million
Leased asset	IncreaseDecrease		million

3. What are the total expenses associated with the lease in the second year if it is accounted for as an operating lease? As a finance lease? Note: Round all entries to three decimal points.

Expense Item (millions)	Operating Lease	Finance Lease
Operating lease expense
Interest expense
Amortization expense
Total