New Lease Accounting ASC 740 (Effective 1/1/2019) Version 10 QUESTION 2 Paul Dirac begins operating his Anti-Matter Bar and Grill on 1/1/19 with an equity investment of $100,000. Dirac assumes that he will earn $59,000 in cash revenues and incur cash operating expenses of 39.00% of revenues each year. The corporate tax rate is assumed to be 21.00% Also on 1/1/19, Dirac leases Equipment to be used in his business. The term of the lease is for 5.00 years and is not cancellable. The present value of the Equipment is $47,500. The economic life of the Equipment is assumed to be 5.00 years with Guaranteed Residual Value $9,025; Expected Residual Value $1,805 and Actual Residual Value $9,025. The company uses straight line depreciation for financial reporting purposes and for tax purposes. Furthermore assume that Dirac knows that the lease company's cost of funds is 7.25%. Questions 1) Create an amortization table for this lease (be careful). 2) How should Dirac Account for this lease (Perform Lease Classification Tests)? 3) Provide ALL journal entries and ALL T-accounts for this transaction over the next 5 years. 4) Based on the information in the problem, create pro-forma financial statements (I/S, SRE, B/S and SCF) for Paul Dirac's Anti-Matter Bar and Grill for the next 5 years. UE (RV)-G(RV) -MN (G (RV), E(RV)]