Information has been gathered for two leases:
Lease A 

• The fair value of the equipment is $800,000 at the inception of the lease.
• The lease term is 5 years, and there is a 3-year renewal term at the option of the lessor.
• Annual lease payments are $145,000 per year for the first 5 years and $100,000 for the next 3 years. Payments are due at the beginning of each lease year.
• All lease payments include the cost of insurance, estimated at $15,000 per year.
• The lessee has a residual guarantee value of $40,000 at the end of the 8th year.
• The lessee does not know the lessor’s implicit rate of interest in the lease. The lessee’s incremental borrowing rate is 8%.
Lease B 

• The fair value of the equipment is $700,000 at the inception of the lease.
• The lease term is 5 years.
• Annual lease payments are $145,000 per year. Payments are due at the beginning of each lease year.
• The lessee is offered a purchase option for the asset for $18,000 at the end of the lease term which is expected to be exercised.
• The lease payments include the cost of insurance, estimated at $12,000 per year.
• The lessor’s implicit rate of interest in the lease is 6% and is known to the lessee. The lessee’s incremental borrowing rate is 8%.

Required:
Calculate the present value of the right-of-use assets for each lease.