On January 1,2016,Gibson Corporation entered into a four-year operating lease.The payments were as follows: $20,000 for 2016,$18,000 for 2017,$16,000 for 2018,and $14,000 for 2019.What is the correct amount of lease expense for 2017?
A)$20,500.
B)$19,000.
C)$17,000.
D)$18,000.

Question

Quizplus · Accepted Answer

Operating leases typically require the lessee to recognize lease expense on a straight-line basis over the lease term. The total lease payments are $68,000 ($20,000 + $18,000 + $16,000 + $14,000) over four years, resulting in an annual lease expense of $17,000 ($68,000 / 4).

On January 1,2016,Gibson Corporation Entered into a Four-Year Operating Lease