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 $486,269 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 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$3.3. (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?
