The Parent Company Leased a Machine to Its Subsidiary Using $\quad$

question 17

Short Answer

The parent company leased a machine to its subsidiary using a direct-financing lease that included a bargain purchase option.As a result of the intercompany lease, the following items should be eliminated in the consolidation process: ?
$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\text { Depreciation }$
$\begin{array}{llll}\text { Machine}&\text { Debt }&\text { Interest}&\text { Expense }\\\end{array}$
A) $\begin{array}{llll}\text { Yes } && \text { Yes } & &\text { Yes } && \text { Yes } \\\end{array}$
B) $\begin{array}{llll}\text { Yes } && \text { Yes } && \text { Yes } && \text { No } \\\end{array}$
C) $\begin{array}{llll}\text {Yes } && \text { No }&&& \text { No } && \text { No } \\\end{array}$
D) $\begin{array}{llll}\text { No } && \text { Yes }&& \text { Yes }&& \text { No }\end{array}$

• A)\(\begin{array}{llll}
• \text { Yes } && \text { Yes } & &\text { Yes } && \text { Yes } \\\end{array}\)
• B)\(\begin{array}{llll}\text { Yes } && \text { Yes } && \text { Yes } && \text { No } \\\end{array}\)
• C)\(\begin{array}{llll}\text {Yes } && \text { No }&&& \text { No } && \text { No } \\\end{array}\)
• D)\(\begin{array}{llll}\text { No } && \text { Yes }&& \text { Yes }&& \text { No }
• \end{array}\)

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Definitions:

Expert Power

The ability to influence others based on the possession of knowledge, skills, or expertise that is recognized and respected.

Politics

Activities associated with governing, decision-making in organizations, or the exercise of authority in complex systems of relationships.

Job Performance

The extent to which an employee carries out their tasks and duties effectively, efficiently, and to the satisfaction of their superiors.

Political Skill

The ability to effectively understand others at work and to use such knowledge to influence others to act in ways that enhance one's personal or organizational objectives.