Exercise 15-9 Direct financing lease; lessor; balance sheet and income statement effects [LO5] On June 30, 2011, Georgia-Atlantic, Inc.

Exercise 15-9 Direct financing lease; lessor; balance sheet and income statement effects [LO5]On June 30, 2011, Georgia-Atlantic, Inc., leased a warehouse facility from IC Leasing Corporation. 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, 2011. Georgia-Atlantic’s incremental borrowing rate is 10%, the same rate IC used to calculate lease payment amounts. IC purchased the warehouse from Builders, Inc. at a cost of $3 million. (Use Table 6)Required:(1)What pretax amounts related to the lease would IC report in its balance sheet at December 31, 2011? (Enter your answer in dollars not in millions. Round "PV factor" to 5 decimal places, intermediate and final answer to the nearest dollar amount. Omit the "$" sign in your response.) Pretax amount$ (2)What pretax amounts related to the lease would IC report in its income statement for the year ended December 31, 2011? (Enter your answer in dollars not in millions. Round "PV factor" to 5 decimal places, intermediate and final answer to the nearest dollar amount. Omit the "$" sign in your response.) Pretax amount$