On January 1 of Year 1, Lessee Inc. leased property at a semiannual payment of $60,000,...

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On January 1 of Year 1, Lessee Inc. leased property at a semiannual payment of $60,000, payable each January 1 and July 1 for eight years. The first payment was paid immediately. The leased property, which is new, cost $1,100,000 and has an estimated useful life of 10 years and no guaranteed residual value. The lessee's incremental borrowing rate is 7% and the lessee is not aware of the lessor's implicit rate. Required a. How would Lessee Inc. classify the lease? Finance Lease b. What balances (account titles and amounts) appear on Lessee Inc.'s balance sheet on December 31 of Year 1 related to the lease? Note: Round your answers to the nearest whole dollar. Balance Sheet Assets Noncurrent Assets: Liabilities Current liabilities: Noncurrent liabilities: End of Year 1 c. What balances (account titles and amounts) appear on Lessee Inc.'s income statement for Year 1 related to the lease? Note: Round your answers to the nearest whole dollar. Income Statement Expenses Interest Expense $ $ Year 1 On January 1 of Year 1, Lessee Inc. leased property at a semiannual payment of $60,000, payable each January 1 and July 1 for eight years. The first payment was paid immediately. The leased property, which is new, cost $1,100,000 and has an estimated useful life of 10 years and no guaranteed residual value. The lessee's incremental borrowing rate is 7% and the lessee is not aware of the lessor's implicit rate. Required a. How would Lessee Inc. classify the lease? Finance Lease b. What balances (account titles and amounts) appear on Lessee Inc.'s balance sheet on December 31 of Year 1 related to the lease? Note: Round your answers to the nearest whole dollar. Balance Sheet Assets Noncurrent Assets: Liabilities Current liabilities: Noncurrent liabilities: End of Year 1 c. What balances (account titles and amounts) appear on Lessee Inc.'s income statement for Year 1 related to the lease? Note: Round your answers to the nearest whole dollar. Income Statement Expenses Interest Expense $ $ Year 1