Question: Rapp Co. leased a new machine to Lake Co. on January 1, 2011. The lease is an operating lease and expires on January 1, 2016.

Rapp Co. leased a new machine to Lake Co. on January 1, 2011. The lease is an operating lease and expires on January 1, 2016. The annual rental is $90,000. Additionally, on January 1, 2011, Lake paid $50,000 to Rapp as a lease bonus and $25,000 as a security deposit to be refunded upon expiration of the lease. In Rapp’s 2011 income statement, the amount of rental revenue should be

a. $140,000

b. $125,000

c. $100,000

d. $ 90,000

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