Under the new ASU,what amount did SmithCo record in its income statement for the reporting year ending December 31,2016,in connection with the lease?
A)$ 3,400.
B)$14,000.
C)$17,400.
D)$20,800.

Question

Quizplus · Accepted Answer

According to the new ASU, SmithCo should record an operating lease liability of $17,400 ($1,450/month x 12 months) and corresponding right-of-use asset of $17,400 on its balance sheet. However, in the income statement, SmithCo would record a total lease expense of $20,800 ($1,450/month x 12 months + $2,200 initial direct costs) for the reporting year ending December 31, 2016. Therefore, option C is the correct answer.

Under the New ASU,what Amount Did SmithCo Record in Its