Summer Limited entered into a four-year lease for an asset with a useful life of five years. Summer Limited pays an initial deposit of $20 000 and the present value of the future cash flows is $80 000. The asset will be returned to the lessor at the end of the lease, there is no guaranteed value by Summer Limited at end of the lease. What is the carrying value of the asset at the end of the second year?

Select one:

a.

$60 000

b.

$40 000

c.

$20 000

d.

$50 000