ask an expertAt January $1$ of the current year, Widget World Corporation leased manufacturing equipment from Clinton Corporation under a $6-$year lease agreement. The lease agreement specifies annual payments of $$25,000$ beginning January $1$ of the current year, the beginning of the lease, and on each December $31$ thereafter. The equipment was acquired recently by Clinton at a cost of $$146,163($its fair value$)$ and was expected to have a useful life of $8$ years with no salvage value at the end of its life. Because the lease term is only $6$ years, the asset does have an expected residual value at the end of the lease term of $$28,000.$ Clinton seeks a $7\%$ return on its lease investments. By this arrangement, the lease is deemed to be a finance lease.

Required:

Determine the present value of the lease using Excel's PV function.

Prepare the journal entry for Widget World Corporation at the beginning of the lease on January $1$ of the current year.

Prepare a partial amortization schedule for the first year of the lease.

Record the first lease payment on January $1$ of the current year.

Record the amortization of the right$-$of$-$use asset on December $31$ of the current year.

Indicate the amounts related to the lease reported on the year$-$end balance sheets and income statements.