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.

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Definitions:

Ethical Behavior

The practice of acting in ways that are morally right and beneficial to society, following principles of integrity and fairness.

Moral Philosophy

Concerns the principles, rules, and values that individuals consider in determining what is right or wrong in their conduct.

Personal Moral

An individual's set of ethical principles or values that guide their behavior and decision-making processes.

Societal Culture

The shared values, norms, identities, and interpretations that influence the behavior of members of a society or social group.