A lessee company signed a lease for equipment from a lessor on January 1, Year 1. The lease requires equal rental payments of $37,930 at the beginning of each year of the term. The PV of the lease payments is $219,580. The company pays all executory costs directly to third parties. The appropriate interest rate is 11.77%. Assume ASPE applies. Both the lessor and lessee have December 31 year ends. How much total expense will be recorded by the lessee in its books in Year 1 in relation to this lease assuming the lease is classified as an operating lease? If applicable, include interest, depreciation, and rent in the expense calculation.

a.

$35,085

b.

$37,930

c.

$34,137

d.

$36,034

e.

$36,982