Part 1: At January 1, 2023, Beaver Company leased a machine from Zipper Manufacturer. The following information pertains to the lease:

Lease term

Annual lease payments beginning January 1, 2023 and at each December 31 thereafter through 2024

Present value of lease payments at 5% (selling price of machine)

3 years

$90.000

$257.347

5%

Zipper Manufacturer's implicit rate (known by Beaver)

On December 31, 2025, the machine reverts back to Zipper. Both companies use straight-line depreciation/amortization. Assume useful life of machine is 3 years. The lease is classified as a finance lease/sales-type lease:

1. What is the amount related to the lease that Beaver will report in its income statement for the year ended December 31, 2023? (Ignore income taxes.)

2. What is the balance of lease liability that Beaver will report in its balance sheet at December 31, 2023?

3. What is the balance of right-of-use asset that Beaver will report in its balance sheet at December 31, 2023?

4. What is the amount related to the bonds that Beaver will report in its statement of cash flows for the year ended December 31, 2023? Indicate the category in which to classify cash flows.

activities at

(amount),

activities

(amount)

5. Assume the cost of the machine on Zipper's book is $214,714. What is the amount related to the lease that Zipper will report in its income statement for the year ended December 31, 2023?