On January

$1,2015,$ Yancey, Inc. signs a $10-$year noncancelable lease agreement

to lease a storage building from Holt Warehouse Company.

Collectibility of lease payments is reasonably predictable and no

important uncertainties surround the amount of costs yet to be

incurred by the lessor. The following information pertains to this

lease agreement.

$($a$)$ The agreement requires equal

rental payments at the beginning each year.

$($b$)$ The fair value of the building

on January $1,2015$ is $$4,000,000$; however, the book value to Holt

is $$3,300,000.$

$($c$)$ The building has an

estimated economic life of $10$ years, with no residual value. Yancey

depreciates similar buildings on the straight$-$line

method.

$($d$)$ At the termination of the lease,

the title to the building will be transferred to the

lessee.

$($e$)$ Yancey$$s incremental borrowing

rate is $11\%$ per year. Holt Warehouse Co$.$ set the annual rental to

insure a $10\%$ rate of return. The implicit rate of the lessor is

known by Yancey, Inc.

$($f$)$ The yearly rental

payment includes $$10,000$ of executory costs related to taxes on the

property.

$$

$$a$.$ $$181,801$b$.$ $$581,801$c$.$ $$591,801$d$.$ $$601,801$

$$ Yancey, Inc. would record depreciation

expense on this storage building in $2015$ of $($Rounded to the nearest

dollar.$)$a$.$ $$0.$b$.$ $$330,000.$c$.$ $$400,000.$d$.$ $$650,981.$