On January 1, 2014, Renee Corp

question 14

Multiple Choice

On January 1, 2014, Renee Corp., a lessee, signed a five-year capital lease for new equipment. The lease requires annual payments of $8,000. The first payment is due on December 31, 2014. Renee guaranteed a residual value of $2,000. On December 31, 2018, Renee returned the asset to the lessor, and the asset was appraised at a value of $1,500. Renee should record which of the following on December 31, 2018?

• A) a $1,500 credit to leased equipment
• B) a $ 500 debit to loss on disposal of leased equipment
• C) a $ 500 debit to cash
• D) a $1,500 credit to cash

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Definitions:

Unanimous Agreement

A consensus or decision where all members or parties involved fully agree without any dissent.

Management

The act or skill of organizing, planning, leading, and controlling resources to achieve specific goals.

Major Decision

A significant ruling or conclusion, often by a court or high-level authority, that sets a precedent or has wide-ranging implications.

Limited Partner

A partner in a limited partnership whose liability is limited to the amount of her investment.