On January 1, 20X6, Funny Bones Inc (FBI) entered into a lease agreement contract that entitled it to use equipment. Details of the contract follow:
Lease payment, not including non-lease component	$7,000
Non-lease component (maintenance agreement)	$500
Implicit rate in the lease (readily determinable by lessee)	7%
Incremental borrowing rate	9%
Lease term	3 years
Economic life of equipment	6 years
Guaranteed residual value	$5,000
Expected pay-out on residual value guarantee	$3,000
Option to purchase	$1,000
Fair value of equipment at end of lease term	$8,000
First annual payment due	Jan 1, 20X6
FBI accounts for the lease and non-lease components in the contract as separate lease components. What is the amount that FBI will record for interest expense for its year-ended December 31, 20X6?

a.

$1,006

b.

$1,057

c.

$943

d.

$1,443