On January 1, 2008, Carley Corporation Signed a Five-Year Noncancelable

On January 1, 2008, Carley Corporation signed a five-year noncancelable lease for equipment. The terms of the lease called for Carley to make annual payments of $60,000 at the end of each year for five years with title to pass to Carley at the end of this period. The equipment has an estimated useful life of 7 years and no salvage value. Carley uses the straight-line method of depreciation for all of its fixed assets. Carley accordingly accounts for this lease transaction as a capital lease. The minimum lease payments were determined to have a present value of $227,448 at an effective interest rate of 10%.
-With respect to this capitalized lease, for 2009 Carley should record

A) interest expense of $22,745 and depreciation expense of $32,493.
B) interest expense of $20,469 and depreciation expense of $32,493.
C) interest expense of $19,019 and depreciation expense of $32,493.
D) interest expense of $14,469 and depreciation expense of $32,493.