Joshua Trucking Leased a Set of Special-Use Trailers for Six

question 122

Multiple Choice

Joshua Trucking leased a set of special-use trailers for six years at an annual rental of $30,000, payable at the end of each year. At the end of these six years the trailers are expected to be essentially worthless. Joshua Trucking's cost of financing is nine percent. What would be the change in Joshua Trucking's balance sheet as a result of leasing this equipment?

• A)Add $40,000 to the Leased Trailers and Lease Obligations account.
• B)Add $40,000 to the Leased Trailers account and $134,578 to the Lease Obligations account.
• C)Add $134,578 to the Leased Trailers and Lease Obligations account.
• D)Make no change in the balance sheet accounts.

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