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:

Capacitance

The ability of a system to store an electrical charge, measured in farads. It is a fundamental property of capacitors, used in various electronic circuits.

Physical Distance

The measurable space between two objects or points, often discussed in terms of safety or accessibility.

J1939 Data Bus

A communication protocol based on CAN (Controller Area Network) used in heavy-duty and commercial vehicles for ECU (Electronic Control Unit) interactions.

Permissible

Permissible refers to what is allowed or permitted, especially within the rules or regulations of a specific context.