AFC Corporation Leased a Piece of Machinery and Correctly Classified

Multiple Choice

AFC Corporation leased a piece of machinery and correctly classified and recorded it as a finance lease.At the date of signing, January 1, 2011, the asset and lease obligation were recorded for $42,000.The first lease payment of $8,200 was due December 31, 2011 and the interest rate they used in their calculations was 7%.The lease term was 10 years.Which of the following best describes what would be reported on AFC's income statement for the year ending December 31, 2011?

A) $8,200 lease expense
B) $8,200 lease expense, $4,200 amortization expense
C) $2,940 interest expense, $1,260 amortization expense
D) $2,940 interest expense, $4,200 amortization expense