On January 3, 2010, the Walton Corporation Signed a 10-Year

On January 3, 2010, the Walton Corporation signed a 10-year non-cancellable lease for manufacturing equipment.The fair value of the equipment at that time was $550, 000.At the end of the lease period, the equipment, which has an estimated life of 15 years, will be returned to the lessor.Additional information is below: $\begin{array}{ll}\text { Lease payments(year-end) } & \$ 80,000 \\\text { WaltonCorporation's incremental borrowing rate } & 10 \% \\\text { Lessor's implicit interest rate (known to Walton) } & 12 \%\\\text {Present value factor for an ordinary annuity of 10 years }\\\text {at \( 10 \% \) }&6.144567\\\text {Present value factor for an ordinaty annuity of 10 years}\\\text {at \( 12 \% \) }&5.650223\end{array}$
Walton should

A) capitalize the equipment at $550, 000
B) capitalize the equipment at $491, 565
C) capitalize the equipment at $452, 018
D) not capitalize the equipment