On January $1,2023,$ Power of Idea Corporation $($POIC$)$ purchased an apartment building for $$2,850,000,$ with the intention of leasing it$.$ The apartment building has an $18-$year life and will be depreciated on a straight$-$line basis starting on January $1,2023.$ The building is not expected to have any residual value.

On June $1,2023,$ under a cancellable lease, POIC leased the building to you for $$552,000$ a year $($$$46,000$ a month$)$ for a three$-$year period ending May $31,2026.$ You paid the full amount for the first year, $$552,000,$ to POIC on June $1,2023.$

During the remainder of $2023,$ POIC incurred $$45,000$ in maintenance costs under the provisions of the lease.The lease is properly classified as an operating lease by both parties. Both parties have December $31$st year ends and follow ASPE.

Required:

a$)$ Assuming a $30\%$ tax rate, how much after$-$tax income will POIC report from this lease in $2023?$ Show the breakdown of your calculated amount.

b$)$ How much rent expense will you report in connection with this lease in $2023?$

c$)$ How would you determine that the lease is properly classified as an operating lease for both parties. Note any additional information you would need that you do not have.