On January 2, 2007, Sylvester Metals Co. leased a mining machine from EDH Leasing Corp. The lease qualifies as an operating lease. The annual payments are $4,000 paid at the end of each year, and the life of the lease is 10 years. What entry would Sylvester Metals Co. make when the machine is delivered by EDH Leasing Corp.?

a. Leased Asset 40,000 Lease Liability 40,000

b. Prepaid Rent 40,000 Lease Liability 40,000

c. Prepaid Rent 4,000 Lease Liability 4,000

d. No entry is necessary.