Happy Corporation Leased a Building from Sensor Company

question 123

Multiple Choice

Happy Corporation leased a building from Sensor Company.The 10-year lease is recorded as a capital lease.The annual payments are $10,000 and the recorded cost of the asset is $67,100.The straight-line method is used to calculate depreciation.Which of the following statements is true?

• A) Depreciation expense of $6,710 will be recorded each year.
• B) Depreciation expense of $10,000 will be recorded each year.
• C) No depreciation expense will be recorded by Happy Corporation.
• D) No interest expense will be recorded by Happy Corporation.

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Definitions:

Atomic Symbol

A one or two-letter notation representing a chemical element (e.g., H for hydrogen, O for oxygen).

Nickel

A hard, silvery-white metallic element with the elemental symbol "Ni" and atomic number 28, used in alloys and to galvanize iron.

Atomic Symbol

A one or two-letter notation used to represent an element on the periodic table uniquely.

Argon

A noble gas element with atomic number 18, colorless, odorless, and inert, used in lighting and welding due to its non-reactive nature.