A six-year operating lease requires annual rent payments of $15, 000 for years 1, 2, and 3, and annual rent payments of $10, 000 for years 4, 5, and 6.The agreement also requires the lessor to pay a $1, 800 annual insurance premium for the leased property.Which of the following amounts should be recognized as the rental revenue in year 1 by the lessor?
A)$10, 000
B)$13, 500
C)$15, 000
D)$16, 800

Question

Quizplus · Accepted Answer

The rental revenue recognized by the lessor in year 1 would be the annual rent payment of $15,000. The insurance premium paid by the lessor is not included in rental revenue as it is a separate expense. The varying annual rent payments do not affect the recognition of rental revenue in year 1.

A Six-Year Operating Lease Requires Annual Rent Payments of $15