Rusty Corporation Purchased a Rust-Inhibiting Machine by Paying $50,000 Cash

question 34

Multiple Choice

Rusty Corporation purchased a rust-inhibiting machine by paying $50,000 cash on the purchase date and agreeing to pay $10,000 every three months during the next two years.The first payment is due three months after the purchase date.Rusty's incremental borrowing rate is 8%.(FV of $1,PV of $1,FVA of $1,and PVA of $1) (Use the appropriate factor(s) from the tables provided. )
-The liability reported on the balance sheet as of the purchase date,after the initial $50,000 payment was made,is closest to:

• A)$123,255.
• B)$130,000.
• C)$80,000.
• D)$73,255.

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Definitions:

Complexity

The state or quality of being intricate or complicated, often used to describe systems, processes, or problems.

Overhead Resources

The ongoing operational costs of running a business that are not directly tied to producing goods or services.

Plantwide Overhead Rate

A single overhead absorption rate calculated for an entire manufacturing plant and applied to all units produced, simplifying the allocation of indirect costs.

Overhead Cost

Expenses related to the operation of a business that cannot be directly linked to a specific product or service.