On June 30, 2016, Blue, Inc., leased a machine from Big Leasing Corporation. The lease agreement qualifies as a capital lease and calls for Blue to make semiannual lease payments of $214,208 over a four-year lease term, payable each June 30 and December 31, with the first payment at June 30, 2016. Blues incremental borrowing rate is 12%, the same rate Big uses to calculate lease payment amounts. Depreciation is recorded on a straight-line basis at the end of each fiscal year. (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.)

1. Determine the present value of the lease payments at June 30, 2016, (to the nearest $000) that Blue uses to record the leased asset and lease liability.

Present Value:

2. What would be the pretax amounts related to the lease that Blue would report in its balance sheet at December 31, 2016?

Leased asset:

Leased liability:

3. What would be the pretax amounts related to the lease that Blue would report in its income statement for the year ended December 31, 2016?

Pretax amount: