Tiger, Inc. signed a lease for equipment on July 1, 2007.The lease is for 10 years (the useful life of the asset).The first of 10 equal annual payments of $500,000 was made on July 1, 2007.The established list selling price for the equipment was $3,375,000.Tiger can borrow money at 12%.Tiger treated this lease as an operating lease and recorded $250,000 rent expense for 2007.You have determined that this is a capital lease and the asset and related obligation should have been recorded at $3,164,125 on July 1, 2007.

Required

Assuming the use of straight-line amortization and no salvage value, what are the amounts of amortization expense and interest expense the client should have recorded for 2007 for this lease?