Quattro Corporation signed a lease from Cinco Leasing Company onJuly 1 Year 1 fo

Quattro Corporation signed a lease from Cinco Leasing Company onJuly 1 Year 1 for equipment having a five-year useful life. Thelease does not include any option to purchase the equipment at theend of the four-year lease term nor does it include a provisionfor ownership transfer. Five equal payments of $10000 per year arerequired by the terms of the lease with the first payment due uponsigning. Quattros incremental borrowing rate is 8 percent but itsimplicit interest rate is unknown.Present value of an annuity at 8% for 5 years = 3.993Present value of an annuity at 8% for 4 years = 3.312On its December 31 Year 1 financial statements Quattro woulddisplay the following amounts in the indicated accounts under U.S.GAAP:Accumulated LeaseEquipment Depreciation Payable$0 $0 $0$43120 $5390 $33120$43120 $4312 $33120$49930 $6241 $39930