Read the problem information in the 1st photo, then the 1st Question & Solution in the 2nd and 3rd photos.

After, answer the following question:

Q#2:

After the first full year under the warehouse lease, what is the carrying amount of Dowell's leased warehouses?

"I don't see that in my intermediate accounting text I saved from college," you grumble to a colleague in the accounting division of Dowell Chemical Corporation. "This will take some research." Your comments pertain to the appropriate accounting treatment of a proposed sublease of warehouses Dowell has used for product storage. Dowell leased the warehouses on December 31. The five-year lease agreement called for Dowell to make quarterly lease payments of $2,503,303, payable each December 31, March 31, June 30, and September 30, with the first payment at the lease's beginning. As a finance lease, Dowell had recorded the right-of-use asset and liability at $40 million, the present value of the lease payments at 10%. Dowell records amortization on a straight-line basis at the end of each fiscal year. Today, Dowell's controller, explained a proposal to sublease the underused warehouses to American Tankers, Incorporated, for the remaining four years of the lease term. American Tankers would be substituted as lessee under the original lease agreement. As the new lessee, it would become the primary obligor under the agreement, and Dowell would not be secondarily liable for fulfilling the obligations under the lease agreement. "Check on how we would need to account for this and get back to me," the controller had said. warehouse lease, what is the balance in Dowell's lease liability? An amortization schedule will be helpful in determining this amount but is not required. Dowell originally recorded the right-of-use asset and liability at \$40 million, which represents the present value of the lease payments at 10%. The quarterly lease payment is $2,503,303, and the lease term is five years, which means there are 20 total quarters in the lease term. STEP 1: At the beginning of the lease, the lease liability is equal to the present value of all future lease payments. To calculate this, I can use the formula for the present value of an annuity: PV=PMT[(1(1+r)n)/(r)] Where: PV=PresentValuePMT=PeriodicPayment($2,503,303)r=DiscountRate(10%or0.10)n=NumberofPeriods(20quarters)PV=$2,503,303[(1(1+0.10)20)/(.10)]PV=$2,503,303[(1(0.1487)/(.10)]PV=$2,503,303(9.5129)PV=$23,796,119.40 So, at the beginning of the lease on December 31 , the lease liability is $23,796,119.40. So, at the beginning of the lease on December 31, the ease liability is $23,796,119.40. STEP 2: Now, after one full year of making quarterly lease payments, three quarterly payments have been made March 31, June 30, and September 30), leaving 17 To calculate the balance in Dowell's lease liability as of December 31, 2025, we need to calculate the present value of the remaining 17 quarterly payments at a discount rate of 10% : Remaining Lease Liability =PMT[(1(1+r)n)/(r)] Remaining Lease Liability =$2,503,303 * [(1(1+0.10)17)/(0.10)] Remaining Lease Liability =$2,503,303 * [(1(0.1978))/(0.10)] Remaining Lease Liability =$2,503,303(8.022) Remaining Lease Liability =$20,080,378.47 ANSWER: So, as of December 31, 2025, after the first full year under the warehouse lease, the balance in Dowell's lease liability should be approximately $20,080,376.47