1.On December 31, 20X1, Ball Company leased a machine from Cook for a 10-year period, expiring December 30, 20Y1. Annual payments of $100,000 are due on December 31. The first payment was made on December 31, 20X1, and the second payment was made on December 31, 20X2. The present value at the inception of the lease for the 10 lease payments discounted at 10% was $676,000. The lease is appropriately accounted for as a finance lease by Ball.Required:Compute the December 31, 20X2, amount that Ball should report as a total finance lease liability after the lease payment has been made.What portion of this total liability should be classified as a current liability?2.On January 1, 20X1, Beard Company purchased a machine for $620,000. The machine is ­expected to have a 10-year life, with no salvage value, and will be depreciated by the straight-line method. On January 1, 20X1, it leased the machine to Child Company for a three-year period at an annual rental of $128,000 to be paid at the end of each year. Beard could have sold the machine for $817,298 instead of leasing it. Child does not know the implicit rate in the lease, but it has an incremental rate of 9%. Child Company has a December 31 reporting year. Use tables (PV of 1, PVAD of 1, and PVOA of 1) (Use the appropriate factor(s) from the tables provided. Round your intermediate calculations and final answers to the nearest whole dollar amount.)Required:Why is this an operating lease for Child Company?What are the amounts of the right-of-use asset and lease liability that Child Company should report on its balance sheet at December 31, 20X1?How much lease expense should Child Company recognize in 20X1?3.On December 31, 20X1, Roe Company leased a machine from Colt for a five-year period. Equal annual payments under the lease are $105,000 (including $5,000 annual executory costs for servicing) and are due on December 31 of each year. The first payment was made on December 31, 20X1, and the second payment was made on December 31, 20X2. The five lease payments are discounted at 10% over the lease term. The present value of lease payments at the beginning of the lease and before the first annual payment was $416,987. Roe appropriately accounts for the lease as a finance lease.Required:What is the lease liability that Roe should report in its December 31, 20X2, balance sheet? (Do not round intermediate calculations. Round your final answer to the nearest whole dollar.)

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