On June 30, 2018, Georgia-Atlantic, Inc., leased warehouse equipment fromBuilders, Inc. The lease agreement calls for Georgia-Atlantic to make semiannuallease payments of $562,907 over a three-year lease term, payable each June30 and December 31, with the first payment at June 30, 2018. Georgia-Atlantic'sincremental borrowing rate is 10%, the same rate Builders used to calculatelease payment amounts. Builders manufactured the equipment at a cost of $2.5million. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Useappropriate factor(s) from the tables provided.)Required:1. Determine the price at which Builders is "selling" the equipment (present valueof the lease payments) at June 30, 2018.2. What amounts related to the lease would Builders report in its balance sheetat December 31, 2018 (ignore taxes)?3. What amounts related to the lease would Builders report in its incomestatement for the year ended December 31, 2018 (ignore taxes)?(For all requirements, enter your answers in whole dollars and not in millions.Round your final answers to nearest whole dollar.)1. Present value2. Amount to be reported in the balance sheet3. Amount to be reported in the income statement

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On June 30, 2018, Georgia-Atlantic, Inc., leased warehouse equipment from Builders, Inc. The lease agreement calls for Georgia-Atlantic to make semiannual lease payments of $562,907 over a three-year lease term, payable each June 30 and December 31, with the first payment at June 30, 2018. Georgia-Atlantic's incremental borrowing rate is 10%, the same rate Builders used to calculate lease payment amounts. Builders manufactured the equipment at a cost of $2.5 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.)

On June 30, 2018, Georgia-Atlantic, Inc., leased warehouse equipment from Builders, Inc. The lease agreement calls for Georgia-Atlantic to make semiannual lease payments of $562,907 over a three-year lease term, payable each June 30 and December 31, with the first payment at June 30, 2018. Georgia-Atlantic's incremental borrowing rate is 10%, the same rate Builders used to calculate lease payment amounts. Builders manufactured the equipment at a cost of $2.5 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.)

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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