Farrakhan Fruits leased farm equipment from Hall Machinery on January 1, 2013. The present value of the lease payments discounted at 10% was $40 million. Ten annual lease payments of $6 million are due at the beginning of each year beginning January 1, 2013. Hall had constructed the equipment recently for $33 million and its retail fair value was $50 million. What amount did Hall record as a residual asset?
A) $2,640,000.
B) $3,200,000.
C) $6,600,000.
D) $7,000,000.
