ned Test East Co. leased a new machine from North Co. on May 1, 2016, under a lease with the following information: Lease term 10 years annual lease payments due at the beginning of each lease year $40,000 remaining useful life of the machine 12 years implicit interest rate 1496 Present value factor for an annuity due ne 10,i=14% 5.95 Present value factor of S1 with terms ne 10, i=14% 0.27 East has the option to purchase the machine on May 1, 2023, by paying a bargain price of $5,000. Question: Which statement is correct recording the right-of-use asset? The right-of-use asset should be depreciated over 12 years based on the remaining economic life of the machine 3 The right-of-use asset should not be depreciated. (3) The right-of-use asset should be depreciated over 10 years based on the lease term The right-of-use asset will be directly decreased in value each year based on the difference between the lease expense and accrual of interest