On January 1, 2021, Shadow Industries (lessor) leased equipment to Bone Co. (lessee) for a 5-year period under non-cancelable agreement, after which the leased asset will revert back to Shadow Industries.

• The equipment costs Shadow $660,000 and normally sells for $744,388.
• Equal payments under the lease are $160,000 and are due on December 31 of each year, with the first payment made on January 1, 2021.
• The equipment has a useful life of 6 years.
• The equipments residual value is $80,000 at the end of the lease term.
• The rate implicit in the lease used by the Shadow is 8%, Bones incremental borrowing rate is 10% and lessee is aware of lessors rate.

What amount would be Bones amortization expense per year?

A. $121,988.

B. $137,988.

C. $148,878.

D. $132,878.