Assume That Souse Agrees to Lease a New Machine from LAIRD

question 3

Multiple Choice

Assume that Souse agrees to lease a new machine from LAIRD on January 1,2017,for $40,000 per year,paid in advance (i.e. ,at the beginning of the year) .Executory costs are $1,000.The lease term is 11 years and the asset's useful life is 10 years.There is no bargain purchase option.The guaranteed residual value is $10,000.Which statement is correct?

• A)The executor costs will be included in the minimum lease payments.
• B)The guaranteed residual will be excluded in the minimum lease payments.
• C)This is an operating lease because there is no bargain purchase option.
• D)This is a finance lease since the lease term is for most of the economic life of the asset.

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Definitions:

Union Workers' Wages

The negotiated salaries for employees who are members of a labor union, often higher than non-union wages due to collective bargaining.

Apprenticeships

Formal training programs that combine on-the-job training with classroom education, typically in a trade or profession.

Oxygen-Enrichment Process

A process that increases the concentration of oxygen in a mixture or environment, often used in industrial applications to enhance combustion or chemical reactions.

Energy Required

The amount of energy needed to perform a particular task or process, such as manufacturing a product or operating a machine.