Red Co. recorded a residual asset of $115,000 in a 10-year lease under which no profit was recorded at commencement by the lessor. The interest rate charged the lessee was 10%. Under the new ASU, the balance in the residual asset after 2 years will be:
a) $80,000.
b) $139,150.
c) $126,500.
d) $103,500.