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At January $1,2024,$ Caf$$ Med leased restaurant equipment from Crescent Corporation under a nine$-$year lease agreement.

$-$ The lease agreement specifies annual payments of $\backslash (\backslash$$ $24,000\backslash )$ beginning January $1,2024,$ the beginning of the lease, and on each December $31$ thereafter through $2031.$

$-$ The equipment was acquired recently by Crescent at a cost of $\backslash (\backslash$$ $162,000\backslash )($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$$$52,070.$

$-$ Crescent seeks a $\backslash (12\backslash \%\backslash )$ return on its lease investments.

By this arrangement, the lease is deemed to be a finance lease.

Note: Use tables, Excel, or a financial calculator. $($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)$

Required:

$1.$ What will be the effect of the lease on Caf$$ Med's earnings for the first year $($ignore taxes$)?$

Note: Enter decreases with negative sign.

$2.$ What will be the balances in the balance sheet accounts related to the lease at the end of the first year for Caf$$ Med $($ignore taxes$)?$

Note: For all requirements, round your intermediate calculations and final answers to the nearest whole dollars.

Answer is complete but not entirely correct.

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