**Lease Accounting Case Study: Georgia-Atlantic, Inc.****Background:**On June 30, 2021, Georgia-Atlantic, Inc. leased warehouse equipment from IC Leasing Corporation. The lease agreement requires Georgia-Atlantic to make semiannual lease payments of $583,573 over a four-year lease term, which also corresponds to the asset's useful life. Payments are to be made each June 30 and December 31, with the first payment on June 30, 2021. The incremental borrowing rate of Georgia-Atlantic is 11%, which is also the rate applied to calculate lease payment amounts. IC obtained the equipment from Builders, Inc. at a cost of $3.9 million.**Tasks:**Using the provided present value factors, perform the following calculations:1. **Calculate the pretax amount related to the lease for IC's balance sheet as of December 31, 2021.**2. **Determine the pretax amount related to the lease in IC's income statement for the year ending December 31, 2021.**(Note: Please provide your final answers in whole dollars, rounded to the nearest whole dollar.)**Instructions for Calculations:**- Use the following present value (PV) and present value annuity (PVA) factors as needed: PV of $1, PV of $1, PVA of $1, PVAD of $1, and PVAD of $1. **Solution Format:**| Calculation Type | Amount ($) ||-------------------------------------------|-----------------|| 1. Pretax amount of net receivable | || 2. Pretax amount of interest revenue | |**Graph/Diagram Explanation:**This scenario does not involve any graphs or diagrams. All calculations are to be performed using the information and present value factors provided above.

Semiannual lease payment to be received = $583,573 Total semiannual payments to be received = 4*2 =…

On June 30, 2021, Georgia-Atlantic, Inc. leased warehouse equipment from IC Leasing Corporation. The lease agreement calls for Georgla-Atlantic to make semiannual lease payments of $583,573 over a four-year lease term (also the asset's useful life). payable each June 30 and December 31, with the first payment at June 30, 2021. Georgia-Atlantic's Incremental borrowing rate is 11%, the same rate IC used to calculate lease payment amounts. IC purchased the equipment from Builders, Inc. at a cost of $3.9 million. (FV of $1. PV of $1, FVA of $1, PVA of $1. FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. What pretax amount related to the lease would IC report in its balance sheet at December 31, 2021? 2. What pretax amount related to the lease would IC report in its Income statement for the year ended December 31, 2021? (For all requirements, enter your answers in whole dollars and not in millions. Round your final answers to the nearest whole dollar.) 1. 2. Pretax amount of net receivable Pretax amount of interest revenue

On June 30, 2021, Georgia-Atlantic, Inc. leased warehouse equipment from IC Leasing Corporation. The lease agreement calls for Georgla-Atlantic to make semiannual lease payments of $583,573 over a four-year lease term (also the asset's useful life). payable each June 30 and December 31, with the first payment at June 30, 2021. Georgia-Atlantic's Incremental borrowing rate is 11%, the same rate IC used to calculate lease payment amounts. IC purchased the equipment from Builders, Inc. at a cost of $3.9 million. (FV of $1. PV of $1, FVA of $1, PVA of $1. FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. What pretax amount related to the lease would IC report in its balance sheet at December 31, 2021? 2. What pretax amount related to the lease would IC report in its Income statement for the year ended December 31, 2021? (For all requirements, enter your answers in whole dollars and not in millions. Round your final answers to the nearest whole dollar.) 1. 2. Pretax amount of net receivable Pretax amount of interest revenue

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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