East Company leased a new machine from North Company on May 1, 2015, under a lease with the following information:

Lease term 10 years

Estimated economic life 14 years

Annual lease payments starting on May 1, 2015 $40,000

Implicit interest rate 6%

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The residual value of the machine is estimated to be $50,000 on May 1, 2025, and it is not guaranteed either by East or by an insurance company.

On May 1, 2015, East should record a leased asset for

A. $312,068

B. $310,975

C. $339,988

D. $299,988

On May 1, 2015, North should record a lease receivable for

A.$312,068

B.$310,975

C.$339,988

D.$362,068

On Easts December 31, 2015 balance sheet, what amount should be reported under long-term liabilities for lease liability less current portion?

A.$277,988.

B.$248,392

C.$272,068

D.$232.068

On Norths December 31, 2015 balance sheet, what amount should be reported under noncurrent assets for investment in direct financing lease?

A.$277,988

B.$248,392

C.$272,068

D.$232,068

For the year ended December 31, 2016, what amount should be reported on Easts income statement for depreciation expense related to the leased asset, assuming the straight line method?

A.$26,208

B.$28,999

C.$33,999

D.$31,207