On December 31, 2010, Lopez Co (lessee) signed a 3-year, non-cancelable lease for the use of manufacturing equipment now owned by Zinger Inc (lessor). The lease expires December 31, 2013 and has the following terms:
1. Annual contractual payments of $16,664 at the end of each year. The first payment is due December 31, 2010.
2. No down payment, No purchase option
3. The asset's FMV at 12/31/10 is $60,000.
4. Lopez does note guarantee any residual value at 12/31/13.
5. Lopez can borrow at 10% per year for a 3-year loan; Lopez is unaware of Zinger's 8% desired return rate.
6. The estimated useful life of the asset is 4 years.
Give Lopez's annual cash flow (indicate operating/investing/financing) and income statement impacts, as well as the cumulative balance sheet impacts (including separating current vs. non-current debt) of this lease from 2010 to 2013. Round all answers to whole dollars.