TB Problem $15-222($Algo$)$

At January $1,2021,$ Butterfly, Inc. leased mining equipment from Diamond Corporation under a nine$-$year lease agreement. The lease agreement specifies annual payments of $\backslash$$$74,000$ beginning January $1,2021,$ the beginning of the lease, and at each December $31$ thereafter through $2028.$ The equipment was acquired recently by Diamond at a cost of $\backslash (\backslash$$ $604,500\backslash )($its fair value$)$ and was expected to have a useful life of $12$ years with no salvage value at the end of its life. $($Because the lease term is only $9$ years, the asset does have an expected residual value at the end of the lease term of $\backslash (\backslash$$ $34,800\backslash ).)$ Diamond seeks a $\backslash (6\backslash \%\backslash )$ return on its lease investments. By this arrangement, the lease is deemed to be a finance lease. $($FV of $\backslash$$$1,$ PV of $\backslash$$$1,$ FVA of $\backslash$$$1,$ PVA of $\backslash$$$1,$ FVAD of $\backslash$$$1$ and PVAD of $\backslash$$$1)($Use appropriate factor$($s$)$ from the tables provided.$)$

Required:

$1.$ What will be the effect of the lease on Butterfly's earnings for the first year $($ignore taxes$)?($Enter decreases with negative numbers. Round your intermediate calculations and final answers to the nearest whole dollar.$)$

$2.$ What will be the balances in the balance sheet accounts related to the lease at the end of the first year for Butterfly $($ignore taxes$)?($Round your intermediate calculations and final answers to the nearest whole dollar.$)$