On December 1, 2015, Clark Co. leased office space for five years at a monthly rental of $70,000. On the same date, Clark paid the lessor the following amounts:

First month's rent $ 70,000

Last month's rent 70,000

Security deposit (refundable at lease expiration) 90,000

Installation of new walls and offices 420,000

Required: What should be Clark's 2015 expense relating to utilization of the office space?

Howe Co. leased equipment to Kew Corp. on January 2, year 1, for an eight-year period expiring December 31, year 8. Equal payments under the lease are $682,000 and are due on January 2 of each year. The first payment was made on January 2, year 1. The list selling price of the equipment is $4,000,000 and its carrying cost on Howe's books is $3,180,000. The lease is appropriately accounted for as a sales-type lease. The present value of the lease payments is $3,750,000.

Required: What amount of profit on the sale should Howe report for the year ended December 31, year 1?