Jackson Corporation Leased Machinery Under a Finance Lease Arrangement with Itslessee

Jackson Corporation leased machinery under a finance lease arrangement with itslessee. At January 1, 2018, the first day of the lease, the asset and lease obligation were recorded for $68,000. The first lease payment of $13,276 was due December 31, 2018 and the interest rate they used in their calculations was 7%. The lease term was 10years. Which of the following best describes what would be reported on Jackson's statement of income for the year ending December 31, 2018?

A) $4,760 interest expense, $2,040 depreciation expense
B) $4,760 interest expense, $5,472 depreciation expense
C) $13,276 lease expense
D) $13,276 lease expense, $6,800 depreciation expense
E) $4,760 interest expense, $6,800 depreciation expense