Use the Following Information for Questions

question 56

Multiple Choice

Use the following information for questions
Alt Corporation enters into an agreement with Yates Rentals Co.on January 1, 2016 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 $287,432 are due on January 1 of each year, starting January 1, 2016.
(b) The fair value of the machine on January 1, 2016, is $800,000.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.
-What type of lease is this from Alt Corporation's viewpoint?

• A)Operating lease
• B)Finance lease
• C)Sales-type lease
• D)Direct-financing lease

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Definitions:

Thalamus

A structure in the brain that acts as a relay station for transmitting sensory information to the cerebral cortex.

Amygdala

A part of the brain involved in emotion, particularly in processing fear, aggression, and social interactions.

Automatic Responses

Reactions that occur without conscious thought, often as a result of learned behaviors or innate physiological mechanisms.

Amygdala

A region of the brain's temporal lobe involved in experiencing emotions, such as fear and pleasure, and processing emotional memory.