Rusty Corporation Purchased a Rust-Inhibiting Machine by Paying $50,000 Cash

question 91

Multiple Choice

Rusty Corporation purchased a rust-inhibiting machine by paying $50,000 cash on the purchase date and agreeing to pay $10,000 every three months during the next two years. The first payment is due three months after the purchase date. Rusty's incremental borrowing rate is 8%. The machine reported on the balance sheet as of the purchase date is closest to:

• A)$123,255.
• B)$130,000.
• C)$80,000.
• D)$73,255.

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Definitions:

Dividends

Payments made by a corporation to its shareholder members, often derived from the company's profits.

Stock Premium

The amount by which the selling price of a share exceeds its par value, also known as share premium.

Other Income

Revenues earned from activities that are not related to a company's primary business operations.

Income Statement

A financial statement that shows a company's revenues, expenses, and profit or loss over a specific time period.