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. Its estimated useful life was 15 years. The total decrease in earnings (pretax) in Farrakhan's 2013 income statement would be:
A) $3,400,000.
B) $4,000,000.
C) $4,440,000.
D) $6,066,667.
