On December 31,2015,JKL Leased a New Machine from MNO

question 226

Multiple Choice

On December 31,2015,JKL leased a new machine from MNO.The following information relates to the lease transaction: * the machine has an estimated useful life of seven years,which coincides with the lease term.
* lease rentals consist of seven equal annual payments of $100,000,the first of which was paid on December 31,2015.
* MNO's implicit interest rate is 12 percent,which is known by JKL.
* JKL's incremental borrowing rate is 14 percent at December 31,2015.
* present value of an annuity of $1 in advance for seven periods at 12 percent is 5.11.
* present value of an annuity of $1 in advance for seven periods at 14 percent is 4.89.
At the inception of the lease,JKL should record a capitalized lease liability of (choose the amount closest to your answer) :

• A) $411,000
• B) $489,000
• C) $500,000
• D) $511,000

---

Definitions:

Quantifier

A logical term used to specify the quantity of specimens in the domain of discourse that satisfy an open sentence.

Open Sentences

Statements in mathematics that contain one or more variables and can be true or false depending on the values of these variables.

Scope

In discussion or analysis, scope refers to the extent or range of view, outlook, application, operation, or effectiveness of a subject.

Truth-Functional Compound

A complex statement whose truth value is determined by the truth values of its component statements and the logical connectives that combine them.