Using the Information Below Answer the Following Questions

question 32

Multiple Choice

Using the information below answer the following questions:
The operating lease is a 3-year lease commencing on 1 January 2012 with payments of $20 000 on 31 December in each of the 3 years. Assume the lease had been treated as a capital lease instead of an operating lease (using a 12% discount rate the present value of the lease payments is $48036; the company uses straight line depreciation for its capital leases) .
-If the lease is treated as a capital lease,what would be the total expense reported in 2009 related to the lease?

• A) $20 000
• B) $16 012
• C) $21 776
• D) $32 024.

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Definitions:

Job-Order Costing

An accounting system used to ascertain costs for each job or project separately, often used in manufacturing or service industries where each job is different.

Manufacturing Overhead

All indirect costs associated with the production process, including equipment maintenance, factory rent, and utilities.

Cost of Goods Sold

Costs incurred directly from the creation of a company's sold products, encompassing both the price of materials and the wages for labor.

Balance Sheet

A financial statement that provides a snapshot of a company's financial position at a specific point in time, showing assets, liabilities, and equity.