Use the Following Information for Questions

question 86

Multiple Choice

Use the following information for questions.
Alt Corporation enters into an agreement with Yates Rentals Co.on January 1, 2011 for the purpose of leasing a machine to be used in its manufacturing operations.The following data pertain to the agreement:
(a) The term of the noncancelable lease is 3 years with no renewal option.Payments of $155,213 are due on December 31 of each year.
(b) The fair value of the machine on January 1, 2011, is $400,000.The machine has a remaining economic life of 10 years, with no residual value.The machine reverts to the lessor upon the termination of the lease.
(c) Alt depreciates all machinery it owns on a straight-line basis.
(d) Alt's incremental borrowing rate is 10% per year.Alt does not have knowledge of the 8% implicit rate used by Yates.
-If the present value of the future lease payments is $400,000 at January 1, 2011, what is the amount of the reduction in the lease liability for Alt Corp.in the second full year of the lease if Alt Corp.accounts for the lease as a finance lease? (Rounded to the nearest dollar.)

• A)$115,213
• B)$123,213
• C)$126,734
• D)$133,070

---

Definitions:

Organizational Plan

A strategic framework outlining the structure, processes, and directions of an entity to achieve its goals.

Free-Form Slides

Slide designs without a strict structure, allowing creativity and flexibility in presentation.

Stuffed Slides

PowerPoint or presentation slides that are overly filled with text, images, or data, making them difficult to read or understand.

Casual Style

Casual style in communication refers to a relaxed and friendly way of expressing oneself, typically used in personal or less formal contexts.