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On June 30, 2011, Georgia-Atlantic, Inc., leased a warehouse facility from IC Leasing Corporation. The lease agreement calls for Georgia-Atlantic to make semiannual lease payments of $450,399 over a four-year lease term, payable each June 30 and December 31, with the first payment at June 30, 2011.Georgia-Atlantic’s incremental borrowing rate is 11%, the same rate IC used to find out 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 $3.01 million

1.What pretax amounts related to the lease would Georgia-Atlantic report in its balance sheet at December 31, 2011?

1)asset? 2)liability

2.What pretax amounts related to the lease would Georgia-Atlantic report in its income statement for the year ended December 31, 2011?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M959887

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