Sheep Corporation leases equipment from Tennis Company on January 1, 2020.

The lease agreement does not transfer ownership, contain a bargain purchase option, and is not a specialized asset.

The lease agreement covers 3 years of the etiipment's 10 year useful life.

The present value of the lease payments is less than 90% of the fair value of the asset leased.

The annual lease payment is $40,000 at the beginning of each year, and Sheep's implicit borrowing rate is 7%. Assume the equipment is carried at a cost of $300,000 and that the lease is an operating lease.

Tennis uses the straight-line method to record depreciation

The journal entry for Tennis (the lessor) to record Depreciation Expense for the year should include a debit for:

O 30,000

O no entry

O 50,000

O 15,000