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On Dec. 31,20X1, Dillard Corp. leased equipment to Akin Corp for three years ending Dec....

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Accounting

On Dec. 31,20X1, Dillard Corp. leased equipment to Akin Corp for three years ending Dec. 31,20X4. The first of the three lease payments of $130,960 was made at the inception of the lease. The equipment cost Dillard $300,000 and has an expected useful life of six years. Its normal sales price is $365,760. The lease includes a purchase option that Akin is reasonably certain to exercise at an option price of $10,000. Dillard's interest rate is 10%. Which of the following is true in accounting for this lease?
Question 1 options:
To amortize the right-of-use asset, Akin will credit right-of-use asset for $121,920.
Dillard will record the receipt of the bargain payment with a credit to equipment for $7,513.
To amortize the right-of-use asset, Akin will debit amortization expense for $60,960.
At the inception of the lease, Dillard will debit lease receivable for $300,000.

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