On June 30, 2014 Equipment Leasing International (ELI) leased equipment to Cheapskate Mfg Corp (CMC). The lease

Question:

On June 30, 2014 Equipment Leasing International (ELI) leased equipment to Cheapskate Mfg Corp (CMC). The lease agreement qualifies as a direct financing lease and calls for CMC to make semiannual lease payments of $303,842 over a four-year lease term, payable each June 30 and December 31, with the first payment at June 30, 2014. CMC's incremental borrowing rate is 12%, the same rate ELI uses to calculate lease payment amounts. Depreciation is recorded on a straight-line basis at the end of each fiscal year.
Required:
What would be the pretax amounts related to the lease that CMC would report in its at December 31, 2014?
What would be the pretax amounts related to the lease that CMC would report in its income statement for the year ended December 31, 2014?
Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...