Refer to the following lease amortization schedule. The 10 payments are made annually starting with the beginning of the lease. Title does not transfer to the lessee and there is no purchase option or guaranteed residual value. The asset has an expected economic life of 12 years. The lease is noncancelable.

Payment		Cash Payment		Effective Interest		Decrease in balance		Outstanding Balance
								72,469
1		10,000				10,000		62,469
2		10,000		4,998		5,002		57,466
3		10,000		4,597		5,403		52,064
4		10,000		4,165		5,835		46,229
5		10,000		3,698		6,302		39,927
6		10,000		3,194		6,806		33,121
7		10,000		2,650		7,350		25,771
8		10,000		2,062		7,938		17,833
9		10,000		?		?		?
10		10,000		?		?		?

What amount would the lessee record as annual amortization on the right-of-use asset using the straight-line method? (Round your answer to the nearest dollar.)

Multiple Choice

$6,247.

$7,247.

$10,000.

$7,311.