Question

On January 1, 2018, Gibson Corporation entered into a four-year operating lease. The payments were as follows: $26,000 for 2018, $20,500 for 2019, $18,000 for 2020, and $14,500 for 2021. What is the correct amount of total lease expense for 2019

Answer 1

Answer: $19,750‬

Explanation:

The Annual Lease expense is the average of the lease over the 4 year period.

Annual Lease Expense  = Total lease expense / number of years

= (26,000 + 20,500 + 18,000 + 14,500) / 4

= 79,000 / 4

= $19,750‬