On January $1,2024,$ two private companies that report under ASPE, Pharoah Ltd$.$ and Cale Inc., were incorporated. Each company operates a restaurant and had identical revenues during the year of $$2$ million but Pharoah bought its building for $$1\mathrm{.}6$ million and the related land for $$700,000.$ The company estimated that the building would have a useful life of $20$ years with no residual value.

Pharoah uses the straight$-$line method of depreciation. Because of the building purchase, Pharoah had an outstanding $4\%$ bank loan during the year amounting on average to $$2\mathrm{.}8$ million.

Cale, however, did not buy a building. Instead, it rented a building under a five$-$year operating lease starting on January $1,2024,$ for $$14,000$ per month. Because of this, the company had to install leasehold improvements for $$100,000,$ which were completed in the first few days of January. Because Cale did not have to buy a building, its outstanding $4\%$ bank loan during $2024$ averaged only $$350,000.$

The income tax rate for both companies is $22\%.$ Assume both companies had identical revenues and expenses except for the items noted above.