Use the Following Information for Questions

question 1

Multiple Choice

Use the following information for questions
Hull Co.leased equipment to Riggs Company on May 1, 2016.The lease expires on May 1, 2017.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, 2016, of $2,800,000.Hull's depreciation on the equipment in 2016 was $360,000.During 2016, 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 2016.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, 2016, should be

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

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Definitions:

Unlimited Personal Liability

A legal structure in certain business types where owners are personally responsible for all of the business's debts, without any limit on the amount for which they can be liable.

Corporate Form

A legal structure for businesses that is recognized as a separate entity from its owners, providing limited liability protection.

Limited Liability

This is a legal structure that protects business owners' personal assets from being used to pay off business debts and liabilities.

Financial Information

Data related to the financial status of a company, including income statements, balance sheets, and cash flow statements.