On January 1, 2020, a machine was purchased for $1.200,000 by Larkspur Co. The machine is expected to have an 8-year life with no salvage value. It is to be depreciated on a straight-line basis. The machine was leased to Crane Inc. for 3 years on January 1, 2020, with annual rent payments of $255,000 due at the beginning of each year, starting January 1, 2020. The machine is expected to have a residual value at the end of the lease term of $562,500, though this amount is unguaranteed. Click here to view factor tables (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) (a) Your answer is correct. How much should Larkspur report as