At the Beginning of the Year, a Firm Leased Equipment

question 8

Multiple Choice

At the beginning of the year, a firm leased equipment on a capital lease, capitalizing $60,000 in its lease receivable account. The contract calls for December 31 payments of $15,000. The lessor's annual reporting period ends December 31 and the contract reflects 10% interest. The lessee made the first payment as required. The direct method statement of cash flows for the lessor should reflect which of the following in the first year of the lease contract (ignore noncash disclosures) ?

• A) $6,000 operating cash flow; $9,000 investing cash flow
• B) $15,000 operating cash flow
• C) $6,000 operating cash flow; $9,000 addition reconciling adjustment
• D) $9,000 investing cash flow

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Definitions:

False Positive

An error in data reporting in which a test result improperly indicates the presence of a condition (such as a disease) when it is not actually present.

Expected Value

The long-run average value of repetitions of the experiment it represents, often used in probability and statistics to predict outcomes of random events.

False Positive

An error in data testing in which a test result improperly indicates the presence of a condition (such as a disease when it is not present).

Expected Gain

The anticipated value or profit that results from a particular action or decision, often calculated in statistical or financial models.