Phil Company Leased a Machine to Its 100%-Owned Subsidiary, Scout

question 50

Multiple Choice

Phil Company leased a machine to its 100%-owned subsidiary, Scout Company.The direct financing lease required annual lease payments in advance of $2,319 for 5 years.The present value of the minimum lease payments at 8% interest is $10,000.The adjustment needed to arrive at consolidated net income for the first year after the lease is ____.

• A)​$0
• B)​$800
• C)​$2,319
• D)​$10,000

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Definitions:

Secret Service Agent

A federal law enforcement officer working for the U.S. Secret Service, responsible for protecting national leaders and investigating financial crimes.

Psychologically Abnormal

Behaviors, thoughts, or emotions that deviate significantly from the norms of society or cause distress and impairment in functioning.

Functional

Capable of operating or functioning in the intended or expected way.

High-Income Nations

Countries with a high level of economic performance, as measured by gross national income (GNI) per capita, indicating a significant degree of industrialization and standard of living.