Use the following data for a company leasing a machine with a capital lease: The lease period is ten years. The lease payments are $ 2980.59 at the end of each year. The firm will own the asset at the end of the lease term but the salvage value will be negligible. 8.5 % is the firm’ s incremental borrowing rate. 8% is the implicit lease rate. If the company uses straight-line depreciation, the first year’ s reported lease expense is:()
A. $ 2635
B. $ 2980
C. $ 3600