Johntech Inc

question 4

Multiple Choice

Johntech Inc. leased a new machine having an expected useful life of 30 years from Carbide Co. Terms of the noncancelable 25-year lease were that Johntech would gain title to the property upon payment of a sum equal to the fair market value of the machine at the termination of the lease. Johntech accounted for the lease as a capital lease and recorded an asset and a liability in the financial records. The asset recorded under this lease should properly be amortized over

• A) 5 years (the period of actual ownership).
• B) 22.5 years (75 percent of the 30-year asset life).
• C) 25 years (the term of the lease).
• D) 30 years (the total asset life).

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Definitions:

Additional Funds

Extra money required or available beyond what was originally budgeted or expected.

Filiform Papillae

Thin, thread-like structures on the tongue's surface involved in sensation rather than taste.

Fungiform Papillae

Mushroom-shaped structures on the tongue, containing taste buds that are responsible for sensing sweet, sour, salty, and bitter tastes.

Circumvallate Papillae

Large taste buds located at the back of the tongue involved in the sensation of taste.