please answer to a question, M20-3

he M20-3 For a lease that transfers ownership of the prop- LO 20.4 erty to the lessee by the end of the lease term, the lessee should: a. record each lease payment as lease expense b. combine interest expense and amortization expense and report as a single lease expense c. amortize the right-of-use asset over the lease term in a manner consistent with the lessee's normal depreciation policy for owned assets d. amortize the right-of-use asset over the economic life of the asset in a manner consistent with the lessee's normal depreciation policy for owned assets Refer to the following information for M20-4 and M20-5. Fox Company, a dealer in machinery and equipment, leased equipment to Tiger Inc. on July 1, 2019. The lease is appropriately accounted for as a finance lease. The lease is for a 10-year period (the useful life of the asset) expiring June 30, 2029. The first of 10 equal annual payments of $500,000 was made on July 1, 2019. Fox had purchased the equipment for $2,675,000 on January 1, 2019, and established a list selling price of $3,375,000 on the equipment. Assume that the present value at July 1, 2019, of the rent payments over the lease term, discounted at 12% (the appropriate interest rate), was $3,165,000. M20-4 Refer to the information for Fox Company above. LO 20.6 What is the amount of profit on the sale and the amount of interest income that Fox should record