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 $545,554 overa four-year lease term, payable each June 30 and December 31, withthe first payment at June 30, 2018. Georgia-Atlantic’s incrementalborrowing rate is 8%, 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$3.8. (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 atJune 30, 2018 that Georgia-Atlantic uses to record the right-of-useasset and lease liability. 2. What pretax amounts related to thelease would Georgia-Atlantic report in its balance sheet atDecember 31, 2018? 3. What pretax amounts related to the leasewould Georgia-Atlantic report in its income statement for the yearended December 31, 2018? (For all requirements, enter your answersin whole dollars and not in millions. Round your final answer tonearest whole dollar.)
