Porter Corporation
NOTE: the Following Multiple Choice Questions Require

question 36

Multiple Choice

Porter Corporation
NOTE: The following multiple choice questions require present value information.
On January 1, 2012, Porter Corporation signed a five-year noncancelable lease for certain machinery. The terms of the lease called for:
$\begin{array}{|l|lcc|} \hline \text {1) } & \text {Price to make amual payments of \( \$ 60,000 \) at the end of each year (starting on Dec. \( \quad 31,2012 \) ) for five years. Porter must return } & \text { }\\&\text { the equipment to the lessor end of this period.}\\\hline \text {2) } & \text { The machinery has an estimated useful life of 6 years and no expected salvage value. } & \text { }\\\hline \text {3) } & \text {Porter usesthe straight-line method of depreciation for all of its fixed assets. } & \text { }\\ \hline\text {4) } & \text { Porter's incremental borrowing rate is \( 8 \% \) . } & \text { }\\\hline \text {5) } & \text {The fair value of the asset at Januaty 1,2012 is \( \$ 275,000 \) . } & \text { }\\\hline\end{array}$

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For the year ended December 31, 2012, Porter should record depreciation expense for the leased equipment equal to

• A) $55,000
• B) $39,927
• C) $47,912
• D) $0

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Definitions:

Population Distributions

Represents the spread of values, or observations, of a particular variable across an entire population.

Nonparametric Tests

Statistical tests that do not assume a specific distribution for the data, used for analyzing ordinal or nominal data with unknown parameters.

Wilcoxon Rank Sum Test

A nonparametric test used to determine whether there is a significant difference between two independent samples by comparing their rank sums.

Significance Level

The threshold below which a statistical result is considered significant, typically reflecting the probability of wrongly rejecting the null hypothesis.