Johnson Institute Leased a New Machine Having an Expected Useful

question 19

Multiple Choice

Johnson Institute leased a new machine having an expected useful life of 12 years. The noncancelable lease term is 10 years, and Johnson may exercise a purchase option at the end of the noncancelable term. The machine should be capitalized by Johnson and depreciated over

• A) 9 years.
• B) 12 years.
• C) 10 years.
• D) 10 or 12 years at Johnson's option.

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Definitions:

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