IBM leases equipment to Schleck, Inc. The non-cancelable term is 6 years beginning January 1, 20X1, with equal rental payments of $41,900 at the beginning of each year. Schleck guarantees the $10,000 residual value although they expect the residual value of the equipment to be only $7,500. The lease does not contain a bargain purchase option nor does it transfer title at the end of the lease term. The fair value of the equipment at the inception of the lease is $215,496. The equipment has a useful life of 7 years. The lessees incremental borrowing rate is 10%, and the lessors implicit interest rate of 8% is known to the lessee.

a.) What is the amount of the Right-of-Use Asset capitalized?

b.) Interest Expense for fiscal year 20X1 equals?

c.) Amortization expense for fiscal year 20X1 equals?

d.) The January 1, 20X2 carrying value of the lease liability equals?