On June 30, 2016, Georgia-Atlantic, Inc., leased a warehouse facility from IC Leasing Corporation. The lease agreement calls for Georgia-Atlantic to make semiannual lease payments of $403,067 over a five-year lease term, payable each June 30 and December 31, with the first payment at June 30, 2016.Georgia-Atlantics incremental borrowing rate is 8%, the same rate IC used to calculate lease payment amounts. Depreciation is recorded on a straight-line basis at the end of each fiscal year. The fair value of the warehouse is $3.4

Required:

1.

Determine the present value of the lease payments at June 30, 2016 that Georgia-Atlantic used to record the leased asset and lease liability.

Present value$3,400,003

2.

What pretax amounts related to the lease would Georgia-Atlantic report in its balance sheet at December 31, 2016?

	Pretax amounts
Liability	$2,713,743
Asset	not ->$2,975,000 What? & how

3.

What pretax amounts related to the lease would Georgia-Atlantic report in its income statement for the year ended December 31, 2016?

Pretax amount

544,877

What & how?