$750,000 1/1/X1 $100,000 December 31 6 10 5% December 31 47 48 USE THE FOLLOWING INFORMATION FOR QUESTIONS #6-8: 49 R&R Company leased equipment from First Title Leasing Corp and the following information is relevant: 50 51 First Title Leasing purchased the equipment for 52 Annual payments beginning 53 Annual payments equal 54 Thereafter payments for the next calendar year will be made on this date each year 55 Lease term 56 Estimated economic life 57 Discount/Interest Rate 58 Year end 59 The lease is non-cancelable 60 First Title Leasing routinely leases this type of equipment 61 62 6. This lease will be classified as which type: 63 A. Finance Lease 64 B. Operating Lease 65 66 67 7. What is the amount of Amortization Expense that the Lessee will recognize in Year 20x2? 68 A. $88,825 69 B. $100,000 70 C. $53,295 71 D. $82,270 72 73 74 8. What is the journal entry the Lessor will book for annual depreciation of the leased asset? 75 A. No journal entry is necessary as the Lessor must derecognize the asset 76 B. Debit Depreciation Expense for $75,000 and Credit Accumulated Depreciation for $75,000 77 C. Debit Depreciation Expense for $125,000 and Credit Accumulated Depreciation for $125,000 78 D. Debit Depreciation Expense for $53,295 and Credit Accumulated Depreciation for $53,295 79