On June 30, 2024, Georgia-Atlantic, Incorporated leased warehouse equipment from IC Leasing Corporation. The lease agreement calls for Georgia-Atlantic to make semiannual lease payments of $576,798 over a five-year lease term (also the asset's useful life). payable each June 30 and December 31, with the first payment on June 30, 2024. Georgia-Atlantic's incremental borrowing rate is 12%, the same rate IC used to calculate lease payment amounts. IC purchased the equipment from Builders, Incorporated at a cost of $4.5 million. Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) Required: 1. What amount related to the lease would IC report in its balance sheet on December 31, 2024 (ignore taxes)? 2. What amount related to the lease would IC report in its income statement for the year ended December 31, 2024 (ignore taxes)?
On June 30, 2024, Georgia-Atlantic, Incorporated leased warehouse equipment from IC Leasing Corporation. The lease agreement calls for Georgia-Atlantic to make semiannual lease payments of $576,798 over a five-year lease term (also the asset's useful life). payable each June 30 and December 31, with the first payment on June 30, 2024. Georgia-Atlantic's incremental borrowing rate is 12%, the same rate IC used to calculate lease payment amounts. IC purchased the equipment from Builders, Incorporated at a cost of $4.5 million. Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) Required: 1. What amount related to the lease would IC report in its balance sheet on December 31, 2024 (ignore taxes)? 2. What amount related to the lease would IC report in its income statement for the year ended December 31, 2024 (ignore taxes)?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Exercise 15-4 (Algo) Sales-type lease; lessor; balance sheet and income statement effects [LO15-2]
On June 30, 2024, Georgia-Atlantic, Incorporated leased warehouse equipment from IC Leasing Corporation. The lease agreement
calls for Georgia-Atlantic to make semiannual lease payments of $576,798 over a five-year lease term (also the asset's useful life).
payable each June 30 and December 31, with the first payment on June 30, 2024. Georgia-Atlantic's incremental borrowing rate is
12%, the same rate IC used to calculate lease payment amounts. IC purchased the equipment from Builders, Incorporated at a cost of
$4.5 million.
Note: Use tables, Excel, or a financial calculator. (FV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1)
Required:
1. What amount related to the lease would IC report in its balance sheet on December 31, 2024 (ignore taxes)?
2. What amount related to the lease would IC report in its income statement for the year ended December 31, 2024 (ignore taxes)?
Note: For all requirements, enter your answers in whole dollars and not in millions. Round the intermediate calculation and final
answers to the nearest whole dollar.
1. Pretax amount of net receivable
2. Pretax amount of interest revenue
$
$
4,500,000
2,647,064](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F550ea890-8a3c-44b1-91cf-258104b766f5%2Fde610318-3198-4aa0-9c97-5af59c44cb1c%2F6wrl2l_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Exercise 15-4 (Algo) Sales-type lease; lessor; balance sheet and income statement effects [LO15-2]
On June 30, 2024, Georgia-Atlantic, Incorporated leased warehouse equipment from IC Leasing Corporation. The lease agreement
calls for Georgia-Atlantic to make semiannual lease payments of $576,798 over a five-year lease term (also the asset's useful life).
payable each June 30 and December 31, with the first payment on June 30, 2024. Georgia-Atlantic's incremental borrowing rate is
12%, the same rate IC used to calculate lease payment amounts. IC purchased the equipment from Builders, Incorporated at a cost of
$4.5 million.
Note: Use tables, Excel, or a financial calculator. (FV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1)
Required:
1. What amount related to the lease would IC report in its balance sheet on December 31, 2024 (ignore taxes)?
2. What amount related to the lease would IC report in its income statement for the year ended December 31, 2024 (ignore taxes)?
Note: For all requirements, enter your answers in whole dollars and not in millions. Round the intermediate calculation and final
answers to the nearest whole dollar.
1. Pretax amount of net receivable
2. Pretax amount of interest revenue
$
$
4,500,000
2,647,064
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