Roman Company leased equipment from Koenig Company on January 1, 2013, for an eight-year period. Equal annual payments under the lease are $300,000 and are due on January 1 of each year. The first payment was made on January 1, 2013. The rate of interest contemplated by Roman and Koenig is 8%. The present value of the lease payments is $1,861,875 and the cost of the equipment on Koenig's accounting records was $1,650,000. Assuming that the lease is appropriately recorded as a sales-type for accounting purposes by Koenig, what would Koenig record for this lease arrangement for the year ended December 31, 2013?

a. $0 dealers profit and $0 depreciation expense b. $0 dealers profit and $$232,734 depreciation expense c. $211,875 dealers profit and $0 depreciation expense d. $211,875 dealers profit and $$232,734 depreciation expense.

The answer is C. I wonder why depreciation expense is $0?

Can you explain?