Refer to the Following Lease Amortization Schedule

question 134

Multiple Choice

Refer to the following lease amortization schedule. The five payments are made annually starting with the beginning of the lease. A $2,000 purchase option is reasonably certain to be exercised at the end of the five-year lease. The asset has an expected economic life of eight years.

-What would be the amount of interest expense recorded with payment 5?

• A) $2,000.
• B) $893.
• C) $7,107.
• D) $1,107.

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Any asset that is cash, an equity instrument of another entity, a contractual right to receive cash or another financial asset, or a contractual right to exchange financial instruments on potentially favorable terms.

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The remaining interest or value that shareholders have in a company after all obligations and liabilities have been satisfied.

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A type of equity security that has priority over common stock in the distribution of dividends and upon liquidation.