1.Sukwinder Corp manufactures equipment for sale or lease.On December 31, 2012, Sukwinder leased equipment to Pattar Sales Inc for five years, with ownership of the equipment being transferred to Pattar at the end of the lease. Annual lease payments are $126,000 (including $6,000 executory costs) and are due on December 31 of each year. The first payment was made on December 31, 2012. Collectibility of the remaining lease payments is reasonably assured, and there are no additional costs (other than executory costs) to be incurred by Sukwinder. The normal sales price of the equipment (fair value) is $462,000, and Sukwinder's cost is $360,000. For the year ended December 31, 2012, what amount of income should Sukwinder report from this lease?

a. $120,000.

b.$132,000.

c.$138,000.

d.$198,000.