On June 30, 2021, Georgia-Atlantic, Inc. leased a warehouse equipment from IC Leasing Corporation. The lease...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
On June 30, 2021, Georgia-Atlantic, Inc. leased a warehouse equipment from IC Leasing Corporation. The lease agreement calls for Georgia-Atlantic to make semiannual lease payments of $559,946 over a four-year lease term, payable each June 30 and December 31, with the first payment at June 30, 2021. Georgia-Atlantic's incremental borrowing rate is 10%, the same rate IC uses to calculate lease payment amounts. Amortization is recorded on a straight-line basis at the end of each fiscal year. The fair value of the equipment is $3.8 million. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Determine the present value of the lease payments at June 30, 2021 that Georgia-Atlantic uses to record the right-of-use asset and lease liability. 2. What pretax amounts related to the lease would Georgia-Atlantic report in its balance sheet at December 31, 2021? 3. What pretax amounts related to the lease would Georgia-Atlantic report in its income statement for the year ended December 31, 2021? (For all requirements, enter your answers in whole dollars and not in millions. Round your final answers to the nearest whole dollar.) 1. Present value 2. Pretax amount for liability Pretax amount for right-of-use asset 3. Pretax amount for interest expense Pretax amount for amortization expense On June 30, 2021, Georgia-Atlantic, Inc. leased warehouse equipment from Builders, Inc. The lease agreement calls for Georgia- Atlantic to make semiannual lease payments of $512,709 over a 5-year lease term (also the asset's useful life), payable each June 30 and December 31, with the first payment at June 30, 2021. Georgia-Atlantic's incremental borrowing rate is 12.0%, the same rate Builders used to calculate lease payment amounts. Builders manufactured the equipment at a cost of $3.5 million. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Determine the price at which Builders is "selling" the equipment (present value of the lease payments) at June 30, 2021. 2. What amount related to the lease would Builders report in its balance sheet at December 31, 2021 (ignore taxes)? 3. What line item amounts related to the lease would Builders report in its income statement for the year ended December 31, 2021 (ignore taxes)? (For all requirements, enter your answers in whole dollars and not in millions. Round your final answer to the nearest whole dollar.) 1. Present value 2. Pretax net receivable 3. Total pretax effect on net income On June 30, 2021, Georgia-Atlantic, Inc. leased a warehouse equipment from IC Leasing Corporation. The lease agreement calls for Georgia-Atlantic to make semiannual lease payments of $559,946 over a four-year lease term, payable each June 30 and December 31, with the first payment at June 30, 2021. Georgia-Atlantic's incremental borrowing rate is 10%, the same rate IC uses to calculate lease payment amounts. Amortization is recorded on a straight-line basis at the end of each fiscal year. The fair value of the equipment is $3.8 million. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Determine the present value of the lease payments at June 30, 2021 that Georgia-Atlantic uses to record the right-of-use asset and lease liability. 2. What pretax amounts related to the lease would Georgia-Atlantic report in its balance sheet at December 31, 2021? 3. What pretax amounts related to the lease would Georgia-Atlantic report in its income statement for the year ended December 31, 2021? (For all requirements, enter your answers in whole dollars and not in millions. Round your final answers to the nearest whole dollar.) 1. Present value 2. Pretax amount for liability Pretax amount for right-of-use asset 3. Pretax amount for interest expense Pretax amount for amortization expense On June 30, 2021, Georgia-Atlantic, Inc. leased warehouse equipment from Builders, Inc. The lease agreement calls for Georgia- Atlantic to make semiannual lease payments of $512,709 over a 5-year lease term (also the asset's useful life), payable each June 30 and December 31, with the first payment at June 30, 2021. Georgia-Atlantic's incremental borrowing rate is 12.0%, the same rate Builders used to calculate lease payment amounts. Builders manufactured the equipment at a cost of $3.5 million. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Determine the price at which Builders is "selling" the equipment (present value of the lease payments) at June 30, 2021. 2. What amount related to the lease would Builders report in its balance sheet at December 31, 2021 (ignore taxes)? 3. What line item amounts related to the lease would Builders report in its income statement for the year ended December 31, 2021 (ignore taxes)? (For all requirements, enter your answers in whole dollars and not in millions. Round your final answer to the nearest whole dollar.) 1. Present value 2. Pretax net receivable 3. Total pretax effect on net income
Expert Answer:
Related Book For
Intermediate Accounting
ISBN: 978-1260481952
10th edition
Authors: J. David Spiceland, James Sepe , Mark Nelson, Wayne Thomas
Posted Date:
Students also viewed these accounting questions
-
A swap agreement calls for Durbin Industries to pay interest annually based on a rate of 1.5% over the one-year T-bill rate, currently 6%. In return, Durbin receives interest at a rate of 6% on a...
-
A swap agreement calls for Rocky Industries to pay interest annually based on a rate of 2% over the one-year T-bill rate, currently 3%. In return, Rocky Industries receives interest at a rate of 4%...
-
A finance lease agreement calls for quarterly lease payments of $7,728 over a 10-year lease term, with the first payment on July 1, the beginning of the lease. The annual interest rate is 12%. Both...
-
Detail how the respond to the following scenarios, with one agreeing or acknowledging the critic, and one seeking more information: "You are so lazy" {Husband says to his wife when she refuses to get...
-
Give both the IUPAC name and the common name for each alcohol. (a) CH3CH2CH(OH)CH3 (d) (CH3)2CHCH2CH2OH OH
-
In Exercise 33, you used a confidence interval to examine the effectiveness of a vaccine against ear infections in babies. Suppose that instead you had conducted a hypothesis test. a) What hypotheses...
-
Can a duty to care be established by statute or contract? Discuss your answer.
-
Nina Corporation issued $8,000,000 in 6 percent, five-year bonds on March 1, 2010, at 92. The semiannual interest payment dates are September 1 and March 1. Prepare entries in journal form for the...
-
Image transcription text Systems Modelling and Analysis - Assignment 1 Due: Friday 25/08/2022 by 5:00:00 pm. To be submitted individually on Canvas and Gradescope. Part 1: Dartboard Positioning...
-
Toledo Custom Manufacturing (TCM) makes machined steel parts to customer specification. They have a variety of machines that can hold tight tolerances. In this case they have just received an order...
-
Respond that the following statement is TRUE or FALSE: 1) Conversion costs include the costs of purchasing and converting raw materials into finished products. Multiple Choice Questions: 2) In a...
-
Show that \(\bar{g} \frac{e^{ \pm i k \bar{R}}}{\bar{R}}\) is a solution for the Helmholtz Equation.
-
Using the general solution for the first order differential equations obtain the relation between the velocity potential and the acceleration potential.
-
A thin airfoil is plunging with \(h=\bar{h} e^{i w t}\), and pitching with \(\alpha=\bar{\alpha} e^{i(\omega t+\phi)}\) about a point \(a\). Obtain the general expression for the leading edge suction...
-
What are the values of the feathering parameters for the airfoils given by Examples 8.5 and 8.6? Examples 8.5 Assume an airfoil pitching about its leading edge and plunging with \(k=0.35\) as follows...
-
A financial portfolio usually consists of a number of investment options such as stocks and mutual funds. Visit online sources such as the Wall Street Journal (www.wsj.com), Google Finance...
-
Activity 2 Consumer Behavior and Decision Making Activity Recall Purchases in the past three months Product Category Brand Consumer decision making process Deliberate/rational or Habitual or Impulse...
-
A company has the following incomplete production budget data for the first quarter: In the previous December, ending inventory was 200 units, which was the minimum required, at 10% of projected...
-
If merchandise inventory is understated at the end of 2020, and the error is not discovered, how will net income be affected in 2021?
-
Branson Electronics Company is a small, publicly traded company preparing its first quarter interim report to be mailed to shareholders. The following information for the quarter has been compiled:...
-
Refer to the situation described in BE 188. By what amount will Coxs paid-in capitalshare repurchase increase if it determines the cost of treasury shares by the FIFO method? Data From BE 18-8 In...
-
What is the present value of the following future amounts? a. $805 to be received 10 years from now discounted back to the present at 10 percent b. $376 to be received 5 years from now discounted...
-
To what amount will the following investments accumulate? a. $6,000 invested for 12 years at 12 percent compounded annually b. $7,500 invested for 8 years at 8 percent compounded annually c. $6,400...
-
At what annual rate would the following have to be invested? a. \($820\) to grow to \($1,988.12\) in 13 years b. \($320\) to grow to \($423.10\) in 6 years c. \($57\) to grow to \($290.30\) in 18...
Study smarter with the SolutionInn App