Grady Company purchased a machine on January 1, 2008 for \($720,000\). The machine is expected to have a 10-year life, no residual value, and will be depreciated by the straight-line method. On January 1, 2008, it leased the machine to Lesch Company for a three-year period at an annual rental of \($125,000\). Grady could have sold the machine for \($860,000\) instead of leasing it. Grady incurred maintenance and other executory costs of \($15,000\) in 2008 under the terms of the lease.
Required:
What amount should Grady report as operating profit on this leased asset for the year ended December 31, 2008.