AFC Corporation Leased a Piece of Machinery and Correctly Classified

question 6

Multiple Choice

AFC Corporation leased a piece of machinery and correctly classified and recorded it as a finance lease.At the date of signing, January 1, 2011, the asset and lease obligation were recorded for $42,000.The first lease payment of $8,200 was due December 31, 2011 and the interest rate they used in their calculations was 7%.The lease term was 10 years.Which of the following best describes what would be reported on AFC's income statement for the year ending December 31, 2011?

• A)$8,200 lease expense
• B)$8,200 lease expense, $4,200 amortization expense
• C)$2,940 interest expense, $1,260 amortization expense
• D)$2,940 interest expense, $4,200 amortization expense

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Definitions:

Collar

In the context of biology, often refers to a region or structure that encircles another, but without additional context, the term is overly broad.

Flagellum

Long, slender cellular structure used for motility.

Eukaryote

Single- or multicelled organism whose cells characteristically have a nucleus; a protist, fungus, plant, or animal.

Protist

A diverse group of eukaryotic organisms, mostly unicellular, that are not plants, animals, or fungi, including amoebas, algae, and plasmodium.