25. Use the following information to answer Questions 22 through 1, 20x0, Teheran Corporation signed a ten year noncancelable lease agreement to lease a storage building from the Amman Com Collectibility of lease payments is reasonably predictable and no important uncertainties surround the amount of costs yet to be incurred by the lessor. an The following information pertains to this lease agreement. (a) The agreement requires equal rental payments at the end of each year (b) The fair market value of the building on January 1, 20xo is S600,000. The building has a carrying value of S500,000 on Amman's books (c) The building has an estimated economic life of ten years, with no residual value. Teheran depreciates similar buildings using the (d) At the termination of the lease, the title to the building will be (e) Teheran's incremental borrowing rate is 8% per year. Amman is straight line method. transferred to the lessee using an implicit rate of 10% in the lease, which is known by Teheran. (f) The annual rental payment includes $2,000 of executory costs related to property taxes on the building. What is the amount of the minimum annual lease payment? (a) $37,647. (b) $95,647. (c) $97,647. (d) $99,647 22. 23. What is the amount of the total annual lease payment? (a) $37,647 (b) $95,647 (c) $97,647 (d) $99,647. What amount of depreciation expense should Teheran record on its books for the leasing of this storage building for 20x0? (a) S0 (b) $60,000. (c) $50,000. (d) $97,647 24. If the lease were nonrenewable, there was no purchase option, title to the building does not pass to the lessee at termination of the lease, and the lease were only for eight years, what type of lease would this be for the lessee? (a) Direct financing lease. (b) Sales type lease. (c) Operating lease. (d) Capital lease. 25