4 Award: 10.oo points On June 30, 2018, Georgia-Atlantic, Inc., leased warehouse

Question

4 Award: 10.oo points 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 $468,683 over a 5-yea ease term, payable each June 30 and December 31, with the first payment at June 30, 2018 Georgia Atlantic's incremental borrowing rate is 10.0% the same rate Builders used to calculate lease ayment amounts. Builders manufactured the equipment at a cost of $3.3 million. (FV of $1, PV of S1. EVA of $1, PVA of $1, EVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required 1. Determine the price at which Builders is "selling" the equipment (present value of the lease payments) at June 30, 2018 De cehat amounts related to the lease would Builders report in its income statement for the year ended December 31, 2018 (ignore taxes)? 2. What amounts related to the lease would Builders report in its balance sheet at December 31,2018 (ignore taxes)? (F answer to nearest whole dollar.) or all requirements, enter your answers in whole dollars and not in millions. Round your final 1. Present value 2. Amount to be reported in the balance sheet 3. Amount to be reported in the income statement rev: 06_ 13_2017 QC_CS-91380, 01 08 2018_ Qc_CS-113230 Hints Hint #1

Explanation / Answer

1 Present value     38,00,000 2 Amount to be reported in the balancesheet     30,29,200 3 Amount to be reported in the Income Statement        6,66,566 1 Present value 468683 * 8.108     38,00,000 2 Amount to be reported in the balancesheet Initial balance, June 30, 2018     38,00,000 June 30, 2018 reduction     (4,68,683) Dec. 31, 2018 reduction *     (3,02,117) December 31, 2018 receivable     30,29,200 * (3800000 - 468683 )*5% = 166566 468683 - 166566 = 302117 3 Income effect for year ended December 31, 2018 June 30, 2018 interest Revenue                     -   Dec 31, 2018 interest Revenue        1,66,566 Interest revenue for 2018 $        1,66,566 Sales revenue     38,00,000 Cost of goods sold (33,00,000) Income Effect        6,66,566

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