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:

Kindness And Compassion

The quality of being friendly, generous, and considerate, combined with a desire to alleviate suffering.

Emergencies

Sudden, unexpected, and often dangerous situations requiring immediate action.

Individual Refers

Likely a typo or incorrect term, thus NO.

Generation

A group of individuals born and living contemporaneously, who have similar ideas, problems, attitudes, and are often defined by specific cultural trends.