Surplus Mining Company Has Leased a Machine from Craft Machinery

question 87

Multiple Choice

Surplus Mining Company has leased a machine from Craft Machinery Company.The annual payments are $6,000,and the life of the lease is eight years.It is estimated that the useful life of the machine is nine years.How would Surplus Mining record the acquisition of the machine?

• A)The machine would be recorded as an asset with a cost of $48,000.
• B)The company would not record the machine as an asset but would record rent expense of $6,000 per year.
• C)The machine would be recorded as an asset,at the present value of the annual cash payments,$6,000 for eight years.
• D)The machine would be recorded as an asset,at the present value of the annual cash payments,$6,000 for nine years.

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Definitions:

ADH Production

The production of antidiuretic hormone, which helps regulate water balance in the body by controlling the amount of water reabsorbed by the kidneys.

Urine Volume

The quantity of urine excreted by the kidneys over a certain period, often used to assess kidney function.

Reabsorption

The process by which substances are taken back into the bloodstream from the renal tubules of the kidney.

Sodium-Hydrogen Antiport

A type of antiporter that exchanges sodium ions for hydrogen ions across the plasma membrane, important in regulating pH and sodium levels.