On June Blue, Incorporated leased a machine from Large Leasing Corporation. The
lease agreement calls for Blue to make semiannual lease payments of $ over a threeyear
lease term, payable each June and December with the first payment on June
Blue's incremental borrowing rate is the same rate Big uses to calculate lease payment
amounts. Depreciation is recorded on a straightline basis at the end of each fiscal year. Large
constructed the machine at a cost of $
Note: Use tables, Excel, or a financial calculator. FV of $ PV of $ FVA of $ PVA of $ FVAD
of $ and PVAD of $
Required:
Determine the price at which Large is "selling" the machine present value of the lease
payments on June
What would be the amounts related to the lease that Large would report in its balance sheet
at December Ignore taxes.
What would be the amounts related to the lease that Large would report in its income
statement for the year ended December Ignore taxes.
Note: For all the requirements, round final answers to the nearest whole dollar amounts.
