Problem $1.$ At the beginning of $2024,$ an entity leased a building from a lessor with the following pertinent information:

Annual rental payable at the beginning of each year, inclusive of executory cost $1,350,000$

Residual value unguaranteed $500,000$

Purchase option reasonably certain to be exercised $500,000$

Lease bonus paid to lessor before commencement of the lease $500,000$

Lease incentive received $100,000$

Initial direct cost $900,000$

Annual executory cost paid by the lessee $350,000$

Cost of dismantling and restoring the asset as required by the contract, inclusive of discount amount $400,000$

Leasehold improvement $3,000,000$

Lease term $5$ years

Useful life of building $8$ years

Implicit interest rate $10\%$

Round the present value to two decimal places.

$1.$ How much is the carrying amount of lease liability at the beginning of $2024?$

a$.4,100,000$

b$.3,100,000$

c$.5,426,500$

d$.$ None of the above

$2.$ What is the cost of the right of use asset?

a$.5,648,000$

b$.4,648,000$

c$.5,800,000$

d$.$ None of the above

$3.$ What is the depreciation for current year?

a$,1,160,000$

b$.1,129,600$

c$.725,000$

d$.$ None of the above

$4.$ What is the interest expense for current year?

a$,410,000$

b$.310,000$

c$.542,650$

d$.$ None of the above

$5.$ What is the carrying amount of lease liability at the beginning of $2025?$

a$.3,410,000$

b$.2,410,000$

c$.4,410,000$

d$.$ None of the above