Surplus Mining Company Has Leased a Machine from Craft Machinery

question 174

Multiple Choice

Surplus Mining Company has leased a machine from Craft Machinery Company.The annual payments are $6,000 and the life of the lease is 8 years.It is estimated that the useful life of the machine is 9 years.How would Surplus Mining record the acquisition of the machine?

• A) The machine would be recorded as an asset with a cost of $48,000.
• B) The company would not record the machine as an asset but would record rent expense of $6,000 per year.
• C) The machine would be recorded as an asset, at the present value of the annual cash payments, $6,000 for 8 years.
• D) The machine would be recorded as an asset, at the present value of the annual cash payments, $6,000 for 9 years.

---

Definitions:

Chi-Square Test

A statistical method designed to test the significance of the connection between two categorically distinct variables.

Contingency Table

A data table that shows the frequency distribution of the variables in a matrix format, useful for statistical analysis like chi-square tests.

Qualitative Variables

Variables that categorize or describe attributes or properties without a natural numerical scale or order.

Contingency Tables

A type of table in a matrix format that displays the frequency distribution of the variables, useful in statistics to analyze the relationship between two or more categorical variables.