In Consolidation at December 31, 2019, What Adjustment Is Necessary

question 31

Multiple Choice

In consolidation at December 31, 2019, what adjustment is necessary for Hogan's Buildings account?

• A) $1,620 increase.
• B) $1,620 decrease.
• C) $1,800 increase.
• D) $1,800 decrease.
• E) No adjustment is necessary.

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Definitions:

After-Tax Borrowing Rate

The interest rate on borrowed funds after accounting for the effect of income taxes.

Cost of Capital

The rate of return that a company must earn on its investment projects to maintain its market value and attract funds.

Financial Lease

A lease agreement where the lessee effectively obtains all the risks and rewards of ownership without actually owning the asset.