Use the Following Information for Questions 31-32

question 20

Multiple Choice

Use the following information for questions 31-32.
On January 2, 2020, Cruise Ltd. signed a ten-year non-cancellable lease for a heavy-duty drill press. The lease required annual payments of $ 52,500, starting December 31, 2020, with title passing to Cruise at the end of the lease. Cruise is accounting for this lease as a capital (finance) lease. The drill press has an estimated useful life of 20 years, with no residual value. Cruise uses straight-line depreciation for all its plant assets. The lease payments were determined to have a present value of $ 352,279, based on an implicit interest rate of 8%.
-On their 2020 income statement, how much interest expense should Cruise report in connection with this lease?

• A) $ 0
• B) $ 14,091
• C) $ 42,000
• D) $ 28,182

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Definitions:

World War II

A global conflict that took place from 1939 to 1945, involving most of the world's nations and resulting in significant military and civilian casualties.

Dispositions

Consistent preferences, ways of thinking, and behavioral tendencies that manifest across varying situations and over time.

Core Attitudes

Fundamental beliefs or feelings that guide behavior and influence how individuals perceive and interact with the world around them.

Situational Influences

External factors or circumstances that can affect an individual's behavior, decisions, and attitudes.