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On June 30, 2024, Lawrence, Incorporated leased warehouse equipment from Trever, Incorporated. The lease agreement calls for Lawrence to make semiannual lease payments of
On June 30, 2024, Lawrence, Incorporated leased warehouse equipment from Trever, Incorporated. The lease agreement calls for Lawrence to make semiannual lease payments of $3,069,627 over a three-year lease term, payable each June 30 and December 31, with the first payment on June 30, 2024. Lawrence's incremental borrowing rate is 12%, the same rate Trever used to calculate lease payment amounts. Trever manufactured the equipment at a cost of $15.0 million Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required: P 1. Determine the price at which Trever is "selling" the equipment (present value of the lease payments) on June 30, 2024. 2. What amounts related to the lease would Trever report in its balance sheet on December 31, 2024? (Ignore taxes.) 3. What amounts related to the lease would Trever report in its income statement for the year ended December 31, 2024? (Ignore taxes.) Note: For all requirements, round your intermediate calculations and final answers to the nearest whole dollar amount, not to millions.
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