On June 30, 2021, Georgia-Atlantic, Inc. leased a warehouse equipment from IC Leasing Corporation. The lease agreement calls for Georgia-Atlantic to make semiannual lease payments of $604,152 over a four-year lease term, payable each June 30 and December 31, with the first payment at June 30, 2021. Georgia-Atlantic's incremental borrowing rate is 10%, the same rate IC uses to calculate lease payment amounts. Amortization is recorded on a straight-line basis at the end of each fiscal year. The fair value of the equipment is $4.1 million (FV of $1. PV of $1. EVA of $1. PVA of $1. FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Determine the present value of the lease payments at June 30, 2021 that Georgio-Atlantic uses to record the right of use asset and 2. What pretax amounts related to the lease would Georgia-Atlantic report in its balance sheet at December 31, 20217 3. What pretax amounts related to the lease would Georgia Atlantic report in its income statement for the year ended December 31 20217 (For all requirements, enter your answers in whole dollars and not in millons. Round your final answers to the nearest whole dollar) 1. Present value 2 Pretax amount for Bability Pretax amount for right-of-use anset 3 Pretax amount for interest expense Pretax amount for amortization expense At January 1, 2021, Caf Med leased restaurant equipment from Crescent Corporation under a nine-year lease agreement. The lease agreement specifies annual payments of $28,000 beginning January 1, 2021, the beginning of the lease, and at each December 31 thereafter through 2028. The equipment was acquired recently by Crescent at a cost of $198.000 (its fair value) and was expected to have a useful life of 13 years with no salvage value at the end of its life. Because the lease term is only 9 years, the asset does have an expected residual value at the end of the lease term of $66,277) Crescent seeks a 11% return on its fease investments. By this arrangement, the lease is deemed to be an operating lease. (FV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of S1 and PVAD of S1) (Use appropriate factor(s) from the tables provided.) Required: 1. What will be the effect of the lease on Caf Med's earnings for the first year (ignore taxes)? (Enter decreases with negative sign) 2. What will be the balances in the balance sheet accounts related to the lease at the end of the first year for Cafe Med ignore taxes)? (For all requirements, round your intermediate calculations and final answers to the nearest whole dollar) 1. Effect on earnings 2. Lease payable balance (end of year) Right-of-use asset balance end of year)
