On January 1, 2013, Gibson Corporation entered into a four-year operating lease. The payments were as follows: $20,000 for 2013, $18,000 for 2014, $16,000 for 2015, and $14,000 for 2016. What is the correct amount of lease expense for 2014?
A)$20,500.
B)$19,000.
C)$17,000.
D)$18,000.

Question

Quizplus · Accepted Answer

The lease expense for an operating lease is typically recognized 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, 2013, Gibson Corporation Entered into a Four-Year