Barry Limited and Allen Limited Enter into a Finance Lease

question 1

Multiple Choice

Barry Limited and Allen Limited enter into a finance lease agreement with the following terms:
-lease term is 4 years
-estimated economic life of the leased asset is 5 years
-4 × annual rental payments of $15 000 each payable in advance
-residual value at the end of the lease term is not guaranteed by the lessee
-interest rate implicit in the lease is 8%.
On inception date, the present value of the lease payments is:

• A) $53 656.
• B) $38 656.
• C) $49 682.
• D) $60 000.

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Definitions:

Metabolic Rate

The rate at which the body uses energy to maintain basic life functions such as breathing, circulation, and cell production.

Cones

Photoreceptor cells located in the eye's retina play a key role in perceiving colors and are most effective in bright light environments.

Nearsighted

A common vision condition, also known as myopia, where distant objects appear blurry while close objects are seen clearly.

Farsighted

A vision condition, also known as hyperopia, where distant objects are seen more clearly than near objects.