On January 1, 2020, Lessor Corp leased the machine to Lessee Company for $130,000 a year for a five-year period ending December 31, 2024. Lessee paid $130,000 to Lessor on January 2, 2020, the first annual lease payment. Lessees incremental borrowing rate is 5%. Lessee accounts for the lease as an operating lease.

Use this information for the next 2 questions.

25What was the deduction to the Right-of-Use Asset account in 2020 for Lessee Company?

$118,195

$106,951

$100,451

$130,000

26What was the lease expense recognized by Lessee Company for the year ended December 31, 2020?

$106,951

$130,000

$100,000

$118,195