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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.

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