Maris Co. purchased a machine on January 1, 2018, for $700,000 for the express purpose...
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Maris Co. purchased a machine on January 1, 2018, for $700,000 for the express purpose of leasing it. The machine is expected to have a 5-year life, no salvage value, and be depreciated on a straight-line monthly basis. On April 1, 2018, under a cancelable lease, Maris leased the machine to Dunbar Company for $450,200 a year for a 4-year period ending March 31, 2022. Maris incurred total maintenance and other related costs under the provisions of the lease of $16,000 relating to the year ended December 31, 2018. Harley paid $450,200 to Maris on April 1, 2018.
1. Under the operating method, what should be the income before income taxes derived by Maris Co. from this lease for the year ended December 31, 2018? (Round answer to 0 decimal places, e.g., $1,575.)
Income before income taxes
$
2. What should be the amount of rent expense incurred by Dunbar from this lease for the year ended December 31, 2018?
Rent expense
$
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