On January 2, 2018, Nori Mining Co

Multiple Choice

On January 2, 2018, Nori Mining Co. (lessee) entered into a 5-year lease for drilling equipment. Nori accounted for the acquisition as a finance lease for $240,000, which includes a $10,000 purchase option at the end of the lease. Nori is reasonably certain to exercise the purchase option. Nori estimates that the equipment's fair value will be $20,000 at the end of its 8-year life. For the year ended December 31, 2018, what amount should Nori recognize as amortization expense on the right-of-use asset?

A) $27,500
B) $30,000
C) $48,000
D) $46,000