On January 1, 2020, Marlene Corp

question 35

Multiple Choice

On January 1, 2020, Marlene Corp. enters into an agreement with Dietrich Rentals Inc. to lease a machine from them. Both corporations adhere to ASPE. The following data relate to the agreement:
1) The term of the non-cancellable lease is three years with no renewal option. Payments of $ 271,622 are due on December 31 of each year.
2) The fair value of the machine on January 1, 2020, is $ 700,640. 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.
3) Marlene depreciates all its machinery on a straight-line basis.
4) Marlene's incremental borrowing rate is 10%. Marlene does not have knowledge of the 8% implicit rate used by Dietrich.
5) Immediately after signing the lease, Dietrich discovers that Marlene is the defendant in a lawsuit that is sufficiently material to make collectibility of future lease payments doubtful.
Assume the present value of the lease payments is $ 700,000 at January 1, 2020.
If Marlene accounts for this lease as a finance lease, what is the amount of the reduction in the lease obligation in calendar 2021? (Round to the nearest dollar.)

• A) $ 201,622
• B) $ 215,622
• C) $ 221,784
• D) $ 232,873

Understand operational costs and how they affect pricing strategies.

Learn to compute profit or loss from a sale price in retail settings.

Calculate the actual realized mark-up in special discount scenarios.

Know how to calculate profit or loss for discounted products.

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Definitions:

Object Relations Theory

A psychoanalytic theory suggesting that relationships and interactions with significant others during infancy shape perceptions, emotions, and personality.

Reality Principle

A psychoanalytic concept that represents the ability of the mind to assess the external world and act upon it accordingly, as opposed to relying on the pleasure principle.

Classical Freudian

Refers to the psychological theories and therapeutic methods developed by Sigmund Freud that emphasize unconscious motives and conflicts as the roots of human behavior.

Object Relations

A theory in psychology that examines the way individuals relate to others and situations in their environment, primarily based on early life experiences.