On January 1, 2003, Belkor entered into a 10-year capital lease for equipment. On December 1, 2006, Belkor terminates the capital lease and incurs a $20,000 loss. How should Belkor recognize the lease termination on their financial statements?
Recognize a $20,000 loss in 2006 as a discontinued operation.
Recognize a $20,000 loss in 2006 as an extraordinary item.
Recognize a $20,000 loss from continuing operations in 2006.
Defer recognition of the loss and recognize pro rata over the life of the lease term.
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