On June 30, 2021, Georgia-Atlantic, Inc. leased warehouse equipment from Builders, Inc. The lease agreement calls for Georgia-Atlantic to make semiannual lease payments of $681,881 over a 4-year lease term (also the assets useful life), payable each June 30 and December 31, with the first payment at June 30, 2021. Georgia-Atlantic's incremental borrowing rate is 9.0%, the same rate Builders used to calculate lease payment amounts. Builders manufactured the equipment at a cost of $4.2 million. (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. Determine the price at which Builders is selling the equipment (present value of the lease payments) at June 30, 2021.

2. What amount related to the lease would Builders report in its balance sheet at December 31, 2021 (ignore taxes)?

3. What line item amounts related to the lease would Builders report in its income statement for the year ended December 31, 2021 (ignore taxes)?

TABLE 6 Present Value of an Annuity Due of $1 (1+i)" PVAD = x (1 + i) wi 1 2 3 4 5 1.0% 1.00000 1.99010 2.97040 3.94099 4.90197 1.5% 1.00000 1.98522 2.95588 3.91220 4.85438 2.0% 1.00000 1.98039 2.94156 3.88388 4.80773 2.5% 3.0% 1.00000 1.00000 1.97561 1.97087 2.927422.91347 3.85602 3.82861 4.76197 4.71710 3.5% 4.0% 4.5% 5.0% 1.00000 1.00000 1.000001.00000 1.96618 1.96154 1.95694 1.95238 2.899692.886092.872672.85941 3.80164 3.775093.74896 3.72325 4.67308 4.62990 4.58753 4.54595 5.5% 1.00000 1.94787 2.84632 3.69793 4.50515 6.0% 1.00000 1.94340 2.83339 3.67301 4.46511 7.0% 8.0% 0.0% 1.000001.00000 1.00000 1.93458 1.92593 1.91743 2.808022.78326 2.75911 3.62432 3.57710 3.53129 4.38721 4.312134.23972 0.0% 11.0% 12.0% 20.0% 1.00000 1.00000 1.00000 1.00000 1.90909 1.90090 1.89286 1.83333 2.73554 2.71252 2.69005 2.52778 3.48685 3.44371 3.40183 3.10648 4.16987 4.10245 4.03735 3.58873 6 5.85343 5.78264 5.71346 5.64583 5.57971 5.51505 5.45182 7 6.79548 6.697196.60143 6.50813 6.417196.32855 6.24214 8 7.72819 7.59821 7.471997.349397.23028 7.11454 7.00205 9 8.65168 8.48593 8.32548 8.17014 8.01969 7.87396 7.73274 109.566029.360529.16224 8.97087 8.78611 8.607698.43533 5.38998 5.32948 6.15787 6.07569 6.89270 6.78637 7.595897.46321 8.26879 8.10782 5.27028 5.21236 5.100204.99271 4.88965 5.99553591732 5.76654 5.62288 5.48592 6.68297 6.58238 6.389296.20637 6.03295 733457 7209796.97130 6.74664 6.53482 795220 7.801697.51523 7.246896.99525 4.79079 4.69590 4.60478 3.99061 5.35526 5.23054 5.11141 4.32551 5.86842 5.71220 5.56376 4.60459 6.33493 6.14612 5.96764 4.83716 6.75902 6.53705 6.32825 5.03097 11 12 13 14 15 10.47130 11.36763 12.25508 13.13374 14.00370 10.22218 11.07112 11.90751 12.73153 13.54338 9.982599.75206 10.78685 10.51421 11.57534 11.25776 12.34837 11.98318 13.10625 12.69091 9.53020 10.25262 10.95400 11.63496 12.29607 9.31661 10.00155 10.66333 11.30274 11.92052 9.11090 9.76048 10.38507 10.98565 11.56312 8.91272 9.52892 10.11858 10.68285 11.22283 8.72173 9.30641 9.86325 10.39357 10.89864 8.537638.36009 9.09254 8.88687 9.61852 9.38384 10.11708 9.85268 10.58965 10.29498 8.02358 7.71008 7.41766 8.49867 8.13896 7.80519 8.942698.536088.16073 9.35765 8.903788.48690 9.74547 9.24424 8.78615 7.14457 6.88923 6.650225.19247 7.49506 7.20652 6.93770 5.32706 7.813697.49236 7.19437 5.43922 8.10336 7.74987 7.42355 5.53268 8.366697.98187 7.62817 5.61057 16 14.86505 14.34323 17 15.71787 15.13126 18 16.56225 15.90765 1917.39827 16.67256 20 18.22601 17.42617 13.84926 13.38138 14.57771 14.05500 15.29187 14.71220 15.99203 15.35336 16.67846 15.97889 12.93794 13.56110 14.16612 14.75351 15.32380 12.51741 12.11839 11.73955 11.37966 11.03758 10.71225 13.09412 12.65230 12.23402 11.83777 11.46216 11.10590 13.65132 13.16567 12.70719 12.27407 11.86461 11.47726 14.18968 13.65930 13.15999 12.68959 12.24607 11.82760 14.70984 14.13394 13.59329 13.08532 12.60765 12.15812 10.10791 9.55948 9.060698.60608 8.19087 7.81086 5.67547 10.44665 9.851379.31256 8.82371 8.37916 797399 5.72956 10.76322 10.12164 9.54363 9.02155 8.54879 8.11963 5.77463 11.05909 10.371899.75563 9.20141 8.70162 8.24967 5.81219 11.33560 10.60360 9.95011 9.36492 8.83929 8.36578 5.84350 21 19.04555 18.16864 17.35143 16.58916 15.87747 25 22.24339 21.03041 19.91393 18.88499 17.93554 30 26.06579 24.37608 22.84438 21.45355 20.18845 40 33.16303 30.36458 27.90259 25.73034 23.80822 15.21240 14.59033 14.00794 13.46221 12.95038 12.46992 11.59401 17.05837 16.24696 15.49548 14.79864 14.15170 13.55036 12.46933 19.03577 17.98371 17.02189 16.14107 15.33310 14.59072 13.27767 22.10250 20.58448 19.22966 18.01704 16.92866 15.94907 14.26493 10.81815 10.12855 11.52876 10.70661 12.15841 11.19828 12.87858 11.72552 9.51356 8.96333 8.46944 5.86958 9.98474 9.34814 8.78432 5.93710 10.36961 9.65011 9.02181 5.97472 10.75696 9.93567 9.23303 5.99592