On January 1, year 8, Blue Company leased a new machine from Green Company. The following information pertains to the lease:

Lease term	5	years
Annual rental payable at beginning of each year	$ 55,000
Useful life of machine	7	years
Blues incremental borrowing rate	12	%
Implicit interest rate in lease (known by Blue)	10	%
Present value of annuity of $1 in advance for 5 periods at
10%	4.17
12%	4.04

The cost of the machine on Greens accounting records is $214,500. It is customized for Blues use with no alternative use to Green at the end of the lease term. At the beginning of the lease term, Blue Company should initially record a right-of-use asset of

Multiple Choice

$222,200

$229,350

$174,350

$214,500