Use the Following Information for Questions

question 26

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.
-Which of the following lease-related revenue and expense items would be recorded by Yates if the lease is accounted for as an operating lease?

• A)Rental Revenue
• B)Interest Income
• C)Depreciation Expense
• D)Rental Revenue and Depreciation Expense

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Definitions:

Secondary Line Voltage

The voltage seen across the secondary winding of a transformer or at the output of a power supply, typically lower than the primary voltage.

Turns Ratio

The ratio of the number of turns in the primary winding to the number of turns in the secondary winding of a transformer, affecting its voltage transformation.

Delta-Wye Transformer

A type of electrical transformer that can convert between delta and wye (star) configurations, facilitating the transformation of voltage levels and phase shift adjustments in power systems.

Wye-Delta Transformer

A transformer configuration used to shift between high and low voltages in a three-phase electrical system, involving a star (Wye) connection and a delta connection.