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On June 30, 2021, Naruto Uzumaki, Inc. leased a warehouse facility from Sasuke Uchiha Corporation. The lease agreement calls for Naruto to make semiannual lose payments of $1,688,721 over a three-year lease term, payable each June 30 and December 31, with the first payment at June 30, 2021. Naruto's incremental borrowing rate is 10%. the same rate Sasuke uses to calculate lease payment amounts. The fair value of the warehouse is $9 million Sasuke recently purchased the warehouse for $3 milion. Required: Amortization is recorded on a straight-line basis at the end of each focal year. Round your answers to the nearest whole dolar amounts. 1. Determine the present value of the lease payments at June 30, 2021 (to the nearest $000) that Naruto uses to record the right-of-use asset and lease liability Choose the appropriate discount factor from this list PV of annuity due of $1: n-6, 1-5% = 5.32948 PV of annuity due of $1: n-3, -10% - 2.73554 PV of ordinary annuity of S1: n=6, -5% 5.07569 PV of ordinary annuity of S1: n-3, 1-10% -2,48685 2. What amounts related to the lease would Naruto report in its balance sheet at December 31, 2021? (Ignore taxes.) 3. What amounts related to the lease would Naruto report in its income statement for the year ended December 31, 2021? (ignore taxes.)

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