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Question 1: Wall Co. leased office premises to Fox, Inc. for a five-year term beginning January 2, year 1. Under the terms of the operating lease, rent for the first year is 8,000 and rent for years two through five is 12,500 per annum. However, as an inducement to enter the lease, Wall granted Fox the first six months of the lease rent-free. In its December 31, year 1 income statement, what amount should Wall report as rental income?
a. 12,000b. 11,600C. 10,800d. 8,000
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