Today is January 1, 2023. Help Me Health Care Company, a non-profit organization, is looking for a lessor to help them finance the acquisition of a Magnetic Resonance Imaging (MRI) machine. The machine sells for $ 2,000,000, and Help Me Health Care does not have the cash or the ability to borrow the money to finance the acquisition.

This is where you come in. You have $ 400,000 of cash, and you also have the ability to borrow $ 1,600,000 from a local bank. The bank would charge you 11% on the loan, with equal annual payments due on December 31 of each year through and including Dec. 31, 2031.

Help Me Health Care has agreed to lease the MRI machine and is willing to pay

$ 210,000 at the end of each year for the next fifteen years.

For tax purposes, the MRI machine would be considered a property with a five-year life.The machine is expected to have a salvage value of $ 600,000 at the end of the lease. Your tax rate is 40%, and there are no special provisions (e.g. Investment Tax Credits) available within the tax code.

QUESTION

Assume that you decide to serve as the lessor for Help Me Health Care. Using the information provided above, please prepare tables that indicate how much income you would report each year over the life of the lease in accordance with current U.S. GAAP.