At the Beginning of the Year,a Firm Leased Equipment on a Capital

question 27

Multiple Choice

At the beginning of the year,a firm leased equipment on a capital lease,capitalizing $50,000 in both its lease liability and leased assets accounts.The contract calls for payments each December 31 of $10,000.The lessee's annual reporting period ends December 31 and the contract reflects 10% interest.The lessee made the first payment as required.Which of the following should be reflected on the statement of cash flows under the indirect method for the first year of the contract (ignoring noncash disclosures) ?

• A) $10,000 financing cash outflow
• B) $10,000 operating cash outflow
• C) $5,000 operating cash outflow;$5,000 financing cash outflow
• D) $5,000 addition in the reconciliation of earnings and net operating cash flow

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Definitions:

Accounting Software

Computer programs designed to manage financial transactions and records, facilitating efficient bookkeeping and financial analysis.

Overpriced

Overpriced indicates that something is valued or offered for sale at a price higher than is considered reasonable or fair in relation to its intrinsic or market value.

Discount

A reduction from the usual cost of an item or service, typically offered to incentivize purchases.

Electrical Generators

Machines that convert mechanical energy into electrical energy for use in an external circuit.