ABC Inc. leases equipment for 10 years. The annual lease payment is $8,000. The interest rate for a 10-year collateralized loan for ABC is 8%. Which of the following is correct?    I       The expenses related to the lease in year 1 will be greater if the lease is accounted for as a finance lease than if the lease is accounted for as an operating lease.   II       The total expenses over the 10-year life of the lease if the lease is accounted for as a finance lease will equal the total expenses over the 10-year life of the lease if the lease is accounted for as an operating lease.  III     The company will record interest expense if the lease is accounted for as a finance lease but not if the lease is accounted for as an operating lease. Select one: a. I, II and III b. I and II c. I and III d. II and III e. I

ABC Inc. leases equipment for 10 years. The annual lease payment is $8,000. The interest rate for a 10-year collateralized loan for ABC is 8%. Which of the following is correct?

   I       The expenses related to the lease in year 1 will be greater if the lease is accounted for as a finance lease than if the lease is accounted for as an operating lease. 

 II       The total expenses over the 10-year life of the lease if the lease is accounted for as a finance lease will equal the total expenses over the 10-year life of the lease if the lease is accounted for as an operating lease.

 III     The company will record interest expense if the lease is accounted for as a finance lease but not if the lease is accounted for as an operating lease.

Select one:
a. I, II and III
b. I and II
c. I and III
d. II and III
e. I
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