On January 2, 2021, Hernandez, Inc. signed a ten-year noncancelable lease for a heavy

duty drill press. The lease stipulated annual payments of $300,000 starting at the beginning of the first year, with title passing to Hernandez at the expiration of the lease. Hernandez treated this transaction as a finance lease. The drill press has an estimated useful life of 15 years, with no salvage value. Hernandez uses straight-line amortization for all of its plant assets. Aggregate lease payments were determined to have a present value of $1,800,000, based on implicit interest of 10%.

     

      In its 2021 income statement, what amount of amortization expense should Hernandez report from this lease transaction?

 

		$300,000
		$240,000
		$180,000
		$120,000