Sales-type lease; lessor; financial statement effects
Response to the following problem:
NutraLabs, Inc., leased a protein analyzer to Werner Chemical, Inc., on September 30, 2016. NutraLabs manufactured the machine at a cost of $5 million. The five-year lease agreement calls for Werner to make quarterly lease payments of $391,548, payable each September 30, December 31, March 31, June 30, with the first payment at September 30, 2016. NutraLabs' implicit interest rate is 12%.
Required:
1. Determine the price at which NutraLabs is "selling" the equipment (present value of the lease payments) at September 30, 2016 (to the nearest $000).
2. What amounts related to the lease would NutraLabs report in its balance sheet at December 31, 2016 (ignore taxes)?
3. What amounts related to the lease would NutraLabs report in its income statement for the year ended December 31, 2016 (ignore taxes)?
4. What amounts related to the lease would NutraLabs report in its statement of cash flows for the year ended December 31, 2016 (ignore taxes)?