Alt Corporation enters into an agreement with Yates Rentals Co. on January 1, 2021 for the purpose of leasing a machine to be used in its manufacturing operations. The following data pertain to the agreement: (a) The term of the noncancelable lease is 3 years with no renewal option. Payments of $574,864 are due on January 1 of each year. (b) The fair value of the machine on January 1, 2021, is $1,600,000. The machine has a remaining economic life of 10 years, with no salvage value. The machine reverts to the lessor upon the termination of the lease. (c) Alt depreciates all machinery it owns on a straight-line basis. (d) Alts incremental borrowing rate is 10% per year. Alt does not have knowledge of the 8% implicit rate used by Yates. (e) Immediately after signing the lease, Yates finds out that Alt Corp. is the defendant in a suit which is sufficiently material to make collectibility of future lease payments doubtful.

Future Value of Ordinary Annuity of 1
Period	5%	6%	8%	10%	12%
1	1.00000	1.00000	1.00000	1.00000	1.00000
2	2.05000	2.06000	2.08000	2.10000	2.12000
3	3.15250	3.18360	3.24640	3.31000	3.37440
4	4.31013	4.37462	4.50611	4.64100	4.77933
5	5.52563	5.63709	5.86660	6.10510	6.35285
6	6.80191	6.97532	7.33592	7.71561	8.11519
7	8.14201	8.39384	8.92280	9.48717	10.08901
8	9.54911	9.89747	10.63663	11.43589	12.29969
9	11.02656	11.49132	12.48756	13.57948	14.77566
10	12.57789	13.18079	14.48656	15.93743	17.54874

	Present Value of an Annuity Due of 1
	Period		5%		6%		8%		10%		12%
	1		1.00000		1.00000		1.00000		1.00000		1.00000
	2		1.95238		1.94340		1.92593		1.90909		1.89286
	3		2.85941		2.83339		2.78326		2.73554		2.69005
	4		3.72325		3.67301		3.57710		3.48685		3.40183
	5		4.54595		4.46511		4.31213		4.16986		4.03735
	6		5.32948		5.21236		4.99271		4.79079		4.60478
	7		6.07569		5.91732		5.62288		5.35526		5.11141
	8		6.78637		6.58238		6.20637		5.86842		5.56376
	9		7.46321		7.20979		6.74664		6.33493		5.96764
	10		8.10782		7.80169		7.24689		6.75902		6.32825

If Alt accounts for the lease as an operating lease, what expenses will be recorded as a consequence of the lease during the fiscal year ended December 31, 2021?

Amortization Expense and Interest Expense

Interest Expense

Lease Expense

Amortization Expense