Use the Following Information for Questions

question 50

Multiple Choice

Use the following information for questions.
Hull Co.leased equipment to Riggs Company on May 1, 2011.The lease expires on May 1, 2012.Riggs could have bought the equipment from Hull for $3,200,000 instead of leasing it.Hull's accounting records showed a book value for the equipment on May 1, 2011, of $2,800,000.Hull's depreciation on the equipment in 2011 was $360,000.During 2011, Riggs paid $720,000 in rentals to Hull for the 8-month period.Hull incurred maintenance and other related costs under the terms of the lease of $64,000 in 2011.After the lease with Riggs expires, Hull will lease the equipment to another company for two years.
-Ignoring income taxes, the amount of expense incurred by Riggs from this lease for the year ended December 31, 2011, should be

• A)$296,000.
• B)$360,000.
• C)$656,000.
• D)$720,000.

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