On June 30, 2018, Georgia-Atlantic, Inc., leased a warehousefacility from IC Leasing Corporation. The...

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Accounting

On June 30, 2018, Georgia-Atlantic, Inc., leased a warehousefacility from IC Leasing Corporation. The lease agreement calls forGeorgia-Atlantic to make semiannual lease payments of $604,355 overa five-year lease term, payable each June 30 and December 31, withthe first payment at June 30, 2018. Georgia-Atlantic’s incrementalborrowing rate is 10%, the same rate IC uses to calculate leasepayment amounts. Depreciation is recorded on a straight-line basisat the end of each fiscal year. The fair value of the warehouse is$4.9. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 andPVAD of $1) (Use appropriate factor(s) from the tables provided.)Required:
1. Determine the present value of the lease payments at June 30,2018 that Georgia-Atlantic uses to record the right-of-use assetand lease liability.
2. What pretax amounts related to the lease wouldGeorgia-Atlantic report in its balance sheet at December 31,2018?
3. What pretax amounts related to the lease wouldGeorgia-Atlantic report in its income statement for the year endedDecember 31, 2018? (For all requirements, enter your answers inwhole dollars and not in millions. Round your final answer tonearest whole dollar.)

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Solution 1 Semiannual lease payment 604355 Total semiannual payments 52 10 Incremental borrowing rate 10 5 semiannual Present value of minimum lease payments used to record right to use See Answer

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In: AccountingOn June 30, 2018, Georgia-Atlantic, Inc., leased a warehousefacility from IC Leasing Corporation. The lease...On June 30, 2018, Georgia-Atlantic, Inc., leased a warehousefacility from IC Leasing Corporation. The lease agreement calls forGeorgia-Atlantic to make semiannual lease payments of $604,355 overa five-year lease term, payable each June 30 and December 31, withthe first payment at June 30, 2018. Georgia-Atlantic’s incrementalborrowing rate is 10%, the same rate IC uses to calculate leasepayment amounts. Depreciation is recorded on a straight-line basisat the end of each fiscal year. The fair value of the warehouse is$4.9. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 andPVAD of $1) (Use appropriate factor(s) from the tables provided.)Required:1. Determine the present value of the lease payments at June 30,2018 that Georgia-Atlantic uses to record the right-of-use assetand lease liability.2. What pretax amounts related to the lease wouldGeorgia-Atlantic report in its balance sheet at December 31,2018?3. What pretax amounts related to the lease wouldGeorgia-Atlantic report in its income statement for the year endedDecember 31, 2018? (For all requirements, enter your answers inwhole dollars and not in millions. Round your final answer tonearest whole dollar.)