Use the Following Information for Questions 65 and 66

question 104

Multiple Choice

Use the following information for questions 65 and 66.
On January 1, 2014, Ogleby Corporation signed a five-year noncancelable lease for equipment. The terms of the lease called for Ogleby to make annual payments of $90,000 at the beginning of each year for five years with title passing to Ogleby at the end of this period. The equipment has an estimated useful life of 7 years and no salvage value. Ogleby uses the straight-line method of depreciation for all of its fixed assets. Ogleby accordingly accounts for this lease transaction as a capital lease. The minimum lease payments were determined to have a present value of $375,289 at an effective interest rate of 10%.
-With respect to this capitalized lease, for 2015 Ogleby should record

• A) interest expense of $28,529 and depreciation expense of $53,613.
• B) interest expense of $37,529 and depreciation expense of $53,613.
• C) interest expense of $22,382 and depreciation expense of $53,613.
• D) interest expense of $31,382 and depreciation expense of $53,613.

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Definitions:

Distinct Stages

Distinct stages refer to separate or clearly differentiated phases within a process or development sequence.

Developmental Process

The sequence of physical, psychological, and emotional changes that occur in human beings from birth to the end of life.

Sequence

An ordered series of events, actions, or items, often following a particular arrangement.

Developmental Psychology

A branch of psychology that studies the growth and changes in human behavior and mental processes across the lifespan.