An Eight-Year Capital Lease Specifies Equal Minimum Annual Lease Payments

question 66

Multiple Choice

An eight-year capital lease specifies equal minimum annual lease payments.Part of this payment represents interest and part represents a reduction in the net lease liability.The portion of the minimum lease payment in the fourth year applicable to the reduction of the net lease liability should be

• A) the same as in the third year.
• B) less than in the third year.
• C) less than in the fifth year.
• D) more than in the fifth year.

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