For a six-year capital lease,the portion of the minimum lease payment in the third year applicable to the reduction of the obligation should be
A)Less than in the second year
B)More than in the second year
C)The same as in the fourth year
D)More than in the fourth year

Question

Quizplus · Accepted Answer

Typically, the portion of the minimum lease payment that goes towards reducing the obligation increases over time as the lease matures. Therefore, in the third year of a six-year capital lease, the portion of the minimum lease payment applicable to the reduction of the obligation should be more than in the second year.

For a Six-Year Capital Lease,the Portion of the Minimum Lease