Franklin Company purchased a machine for leasing purposes on January 1, 2020, for $1,000,000. The machine has a 10-year life, has no residual value, and will be depreciated on a straight-line basis. On January 2, 2020, Franklin leased the machine to Debit Company for $160,000 a year for a five-year period ending December 31, 2024, at which time, the machine reverts to Franklin. Debit does not guarantee a residual value of the machine at lease-end, although Franklin does plan to lease the equipment to Debit (or another company) for an additional 5 years. Debit paid $160,000 to Franklin on January 2, 2020, the first annual lease payment. During the year ended December 31, 2020, Franklin incurred normal maintenance and other related expenses of $1,000 under the provisions of this operating lease. What was the income before income taxes derived by Franklin from this lease for the year ended December 31, 2020?  

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To calculate the income before income taxes derived by Franklin from this lease for the year ended D... View the full answer