On December 1,2014,Boron Inc

question 71

Multiple Choice

On December 1,2014,Boron Inc.signed an operating lease for a warehouse for ten years at $15,000 per year.Upon execution of the lease,Boron paid $30,000 covering rent for the first two years.How much should be shown in Boron's income statement for the year ended December 31,2014,as rent expense?

• A) $0
• B) $1,250
• C) $15,000
• D) $30,000

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Definitions:

Traditional Income Statement

A financial statement that displays a company's revenues, expenses, and net income over a specific period, typically emphasizing historical cost accounting.

Cash Flows

The net amount of cash and cash-equivalents moving into and out of a business.

Financial Leverage

The use of borrowed money (debt) to finance the acquisition of assets, with the expectation that the profits will be greater than the interest payable.

Tax Deductible

Refers to certain expenses that can be subtracted from income to reduce the total taxable income.