Refer to the Following Lease Amortization Schedule

Multiple Choice

Refer to the following lease amortization schedule. The five payments are made annually starting with the beginning of the lease. A $2,000 purchase option is reasonably certain to be exercised at the end of the five-year lease. The asset has an expected economic life of eight years.

-What amount would the lessee record as annual amortization on the asset using the straight-line method, assuming no residual value?

A) $3,325.
B) $6,920.
C) $4,325.
D) $5,320.