On June 30, 2018, Georgia-Atlantic, Inc. leased a warehouse facility from IC Leasing Corporation. The lease agreement

Question:

On June 30, 2018, Georgia-Atlantic, Inc. leased a warehouse facility from IC Leasing Corporation. The lease agreement calls for Georgia-Atlantic to make semiannual lease payments of $562,907 over a three-year lease term, payable each June 30 and December 31, with the first payment at June 30, 2018. Georgia-Atlantic's incremental borrowing rate is 10%, the same rate IC uses to calculate lease payment amounts. Depreciation is recorded on a straight-line basis at the end of each fiscal year. The fair value of the warehouse is $3 million.
Required:
1. Determine the present value of the lease payments at June 30, 2018 (to the nearest $000) that Georgia-Atlantic uses to record the right-of-use asset and lease liability.
2. What amounts related to the lease would Georgia-Atlantic report in its at December 31, 2018 (ignore taxes)?
3. What amounts related to the lease would Georgia-Atlantic report in its income statement for the year ended December 31, 2018 (ignore taxes)?
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...