On January 1, 2021, Rick's Pawn Shop leased a truck from Corey Motors for a six-year period with an option to extend the lease for three years. Rick's had no significant economic incentive as of the beginning of the lease to exercise the 3-year extension option. Annual lease payments are $30,000 due on December 31 of each year, calculated by the lessor using a 4% discount rate. Assume that at the beginning of the third year, January 1, 2023, Rick's had made significant improvements to the truck whose cost could be recovered only if it exercises the extension option, creating an expectation that extension of the lease was reasonably certain. The relevant interest rate at that time was 5%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $ 1) (Use appropriate factor(s) from the tables provided.) Required: 1. Prepare the journal entry, if any, at the beginning of the third year for the lessee to account for the reassessment. 2. Prepare the journal entry, if any, at the beginning of the third year for the lessor to account for the reassessment. Determine the present value of the lease payments at September 30, 2021. What pretax amounts related to the lease would Werner report in its balance sheet at December 31, 2021? What pretax amounts related to the lease would Werner report in its income statement for the year ended December 31, 2021? (Round your intermediate and final answers to nearest whole dollar.) Show less 1. 2. Present value of lease payments at Sept. 30, 2021: Balance of lease liability at Dec. 31, 2021: Balance of right-of-use asset at Dec. 31, 2021: Total expenses related to lease for the year ended Dec. 31, 2021: 3. Reg 1 to 3 Reg 4 Req 1 to 3 Req 4 What pretax amounts related to the lease would Werner report in its statement of cash flows for the year ended December 31, 2021? (Round your intermediate and final answers to nearest whole dollar.) Finance lease Interest portion Principal portion