Alpine Ltd Signed a 10-Year Non-Cancellable Lease with Mt Buller

question 20

Multiple Choice

Alpine Ltd signed a 10-year non-cancellable lease with Mt Buller Ltd for the use of high-tech equipment.No bargain purchase option is provided in the lease contract. The following information is available.
What is the amount to be recorded as an asset and a liability in the books of the lessee that is in accordance with AASB 117 "Leases"?

• A) $0;
• B) $120 000;
• C) $125 000;
• D) $200 000;
• E) None of the given answers

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Definitions:

Market Demand

This refers to the total demand for a product or service by all consumers in a particular market.

Competitive Firm

A company that operates in a market where it must compete with other firms for customers, characterized by the inability to control market prices.

Higher Profits

Increased earnings resulting from a rise in revenue, a decrease in costs, or both.

Resource Cost

The total cost associated with the utilization of resources such as labor, capital, and materials in the production of goods and services.