On February 20, 2017, Buffalo Inc. purchased a machine for $1,431,600for the purpose of leasing it. The machine is expected to have a 10-year life, no residual value, and will be depreciated on the straight-line basis. The machine was leased to Carla Company on March 1, 2017, for a 4-year period at a monthly rental of $19,200. There is no provision for the renewal of the lease or purchase of the machine by the lessee at the expiration of the lease term. Buffalo paid $27,360of commissions associated with negotiating the lease in February 2017.

(a) What expense should Carla Company record as a result of the facts above for the year ended December 31, 2017?

Rent Expense$

(b) What income or loss before income taxes should Buffalo record as a result of the facts above for the year ended December 31, 2017? (Hint: Amortize commissions over the life of the lease.)

Income from lease before taxes$