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 $450,399 over a four-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 11%, the same rate IC used to calculate lease payment amounts. Depreciation is recorded on a straight-line basis at the end of each fiscal year. The fair value of the warehouse is $3.01 million
1.What pretax amounts related to the lease would Georgia-Atlantic report in its balance sheet at December 31, 2011?
1)asset? 2)liability
2.What pretax amounts related to the lease would Georgia-Atlantic report in its income statement for the year ended December 31, 2011?