Use the Following Information for Questions

question 14

Multiple Choice

Use the following information for questions.
On January 1, 2011, Ogleby Corporation signed a five-year noncancelable lease for equipment.The terms of the lease called for Ogleby to make annual payments of $60,000 at the end of each year for five years with title to pass to Ogleby at the end of this period.The equipment has an estimated useful life of 7 years and no residual value.Ogleby uses the straight-line method of depreciation for all of its fixed assets.Ogleby accordingly accounts for this lease transaction as a finance 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 2012 Ogleby 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.

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Definitions:

Vicarious Conditioning

A form of learning in which the learner acquires a conditioned response merely by observing another participant being conditioned.

Insight Learning

A form of problem-solving that occurs when a solution is suddenly realized after a period of contemplation, often without the trial-and-error processes associated with operant conditioning.

Garbage Can

A metaphor in organizational studies describing decision-making in organized anarchies where decisions are made randomly.

Principle Of Belongness

An aspect of learning theory suggesting that items or ideas that are perceived as belonging together are more easily remembered.