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
								69,611
1		11,000				11,000		58,611
2		11,000		7,033		3,967		54,644
3		11,000		6,557		4,443		50,201
4		11,000		6,024		4,976		45,225
5		11,000		5,427		5,573		39,652
6		11,000		4,758		6,242		33,410
7		11,000		4,009		6,991		26,419
8		11,000		3,170		7,830		18,589
9		11,000		?		?		?
10		11,000		?		?		?

What amount would the lessee record as annual amortization on the right-of-use asset using the straight-line method?

Multiple Choice

• $6,961.

• $11,000.

• $7,025.

• $5,861.