Assume That Speery Agrees to Lease a New Machine from LEERY

question 22

Multiple Choice

Assume that Speery agrees to lease a new machine from LEERY on January 1,2011,for $30,000 per year,paid in advance (i.e.,at the beginning of the year) .The lease term is 10 years and the asset's useful life is 8 years.There is no bargain purchase option.The unguaranteed residual value is $10,000.Which statement is correct?

• A)The unguaranteed residual will be recorded on Speery's balance sheet.
• B)The lease is an operating lease.
• C)The lease is a finance lease.
• D)More information is needed to determine the accounting treatment.

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Definitions:

Labour-Intensive Firms

Companies that require a higher portion of labor input in their operations as compared to capital input, often leading to higher employment levels.

Employee Stability

The extent to which an organization retains its workforce, minimizing turnover and fostering a stable work environment.

Training And Development

Programs and activities aimed at improving the knowledge, skills, and competencies of employees to enhance their performance and career growth.

Hybrid

A combination of two or more different things, aimed at achieving a particular objective or enhancing functionality, such as hybrid vehicles or hybrid work models.