On January 1, 2014, MU Corporation Leased an Asset, Under

question 223

Multiple Choice

On January 1, 2014, MU Corporation leased an asset, under an operating lease, to obtain the use of a special machine for three years.The lease payments were $9,000 per year payable at each year-end; the lessee must pay all operating expenses.At the inception date, MU Corporation should:

• A)record the asset at the present value of the annual lease payments.
• B)record the rent expense of $27,000.
• C)make no entry.
• D)record the asset at $27,000.
• E)record the asset at its fair market value.

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Definitions:

Commission

Commission is a fee paid to an agent or employee for transacting a piece of business or performing a service, often a percentage of the sale.

Monthly Salary

A fixed amount of money or compensation paid to an employee by an employer for services rendered during a month.

Commission

A fee paid to an agent or employee for transacting a piece of business or performing a service, often a percentage of the transaction.

Appliances

Electrical or mechanical machines that perform domestic functions, such as refrigerators or washing machines.