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:

Cessations

The act of stopping or discontinuing an action or behavior.

Narcolepsy

A sleep disorder characterized by uncontrollable sleep attacks. The sufferer may lapse directly into REM sleep, often at inopportune times.

Sleepiness

The state or condition of feeling the need for sleep, often accompanied by lethargy and decreased alertness.

Seizures

Sudden, uncontrolled electrical disturbances in the brain that can cause changes in behavior, movements, feelings, and levels of consciousness.