Brandon Corporation Has Leased an Asset That They Are Correctly

question 1

Multiple Choice

Brandon Corporation has leased an asset that they are correctly recording as a capital lease.When they signed the lease the asset was recorded at $39,925.The interest rate used in the calculations is 8%, the asset has an expected useful life to Brandon of 8 years, and the annual lease payment is $10,000.The total expense related to the lease reported on Brandon's income statement in the first year of the lease is closest to?

• A)$3,194
• B)$4,990
• C)$8,184
• D)$10,000

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Definitions:

Insolvent

The condition in which an individual or organization is unable to meet financial obligations due to lack of funds.

UCC 2-702(2)

A provision within the Uniform Commercial Code that allows sellers of goods to withhold delivery if they discover the buyer to be insolvent, under certain conditions.

Reclaim Goods

The process of recovering goods that have been sold or disposed of, often seen in bankruptcy or default situations.

Cover

In contract law, the purchasing of goods or services by a buyer to replace those promised but not delivered by the seller.