On January 1, 2018, HK Corporation signed a ten-year noncancelable lease for certain machinery. The terms of the lease called for HK to make annual payments of $280,000 at the end of each year for ten years with the title passing to HK at the end of this period. The machinery has an estimated useful life of 16 years and no salvage value. HK uses the straight-line method of depreciation for all of its fixed assets. HK accordingly accounted for this lease transaction as a capital lease. The lease payments were determined to have a present value of $1,600,000 at an effective interest rate of 6%. With respect to this capitalized lease, HK should record for 2018 a. interest expense of $92,460 and depreciation expense of $94,400. b. lease expense of $240,000. c. interest expense of $96,000 and depreciation expense of $100,000. d. interest expense of $88,400 and depreciation expense of $74,000. QUESTION 20 The following data are for the pension plan for the employees of Jackie Company. 1/1/1712/31/1712/31/18