A Government Enters into a Capital Lease for the Purchase

question 60

Multiple Choice

A government enters into a capital lease for the purchase of a new snow plow.The present value of the future lease payments is $845,500 and there is a down payment at the inception of the lease of $25,000.The snow plow should be recorded in the General Fund at:

• A) $ 25,000.
• B) $870,500.
• C) $845,500.
• D) $0.

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Definitions:

Corporation

A legal entity that is separate and distinct from its owners, capable of owning assets, incurring liabilities, and conducting business.

Stockholders

Individuals or entities that own shares in a corporation, thereby having a claim to a part of its assets and earnings.

Legal Entity

An individual, company, or organization that has legal rights and obligations, including the capacity to enter legal contracts, sue, and be sued.

Public Goods

Goods that are non-excludable and non-rivalrous, meaning individuals cannot be effectively excluded from use, and use by one person does not reduce availability to others.