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Source Inc. (lessor) entered in a lease agreement of equipment for a 5-year period with Lemon...

Source Inc. (lessor) entered in a lease agreement of equipment for a 5-year period with Lemon Inc. (lessee). The lease is properly classified as an operating lease by Source Inc. Lease payments were structured as follows:

Year One:               $7,000

Year Two:               $14,000

Year Three:             $10,000

Year Four:               $12,000

Year Five:               $12,500

What is the amount of lease revenue recognized in Year One and Year Two by Source Inc.?

                        Year One          Year Two

A.

$6,000              $10,000
B.

$11,100             $11,100
C.

$10,100             $10,100
D.

$12,500                         $10,000
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