Problemon june 30 2013 georgia-atlantic inc leased a, Ask an Expert

Accounting

Problem:

On June 30, 2013, Georgia-Atlantic, Inc., leased a warehouse facility from IC Leasing Corporation. The lease agreement calls for Georgia-Atlantic to make semiannual lease payments of $681,881 over a four-year lease term, payable each June 30 and December 31, with the first payment at June 30, 2013.Georgia-Atlantic's incremental borrowing rate is 8%, the same rate IC used 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 $4,774,565. (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:

Question 1: Determine the present value of the lease payments at June 30, 2013 that Georgia-Atlantic used to record the leased asset and lease liability. (Enter your answer in whole dollars.)

Question 2: What pretax amounts related to the lease would Georgia-Atlantic report in its balance sheet at December 31, 2013? (Enter your answers in whole dollars.)

Question 3: What pretax amounts related to the lease would Georgia-Atlantic report in its income statement for the year ended December 31, 2013? (Enter your answer in whole dollars.)

Note: Show all workings.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91165933

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