A Machine Has a Useful Life of 4 Years and a Cash

question 4

Multiple Choice

A machine has a useful life of 4 years and a cash value of €12,000.Company A leases the machine for €300 per month in advance and the lease is cancellable.Company B leases the machine for 8 half yearly payments in advance of €2,250.Company C leases the machine for 6 half yearly payments in advance of €1,800.Company D leases the machine for 4 half yearly payments in advance of €1,250.Which of these should be classified as a finance lease?

• A)Company A
• B)Company B
• C)Company C
• D)Company D

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Definitions:

Consistent Form

The quality of maintaining uniformity or stability in structure or appearance over time.

Color Constancy

The perceptual property that ensures an object appears the same color under varying lighting conditions.

Perceptual Constancy

The ability of the visual system to perceive objects as having constant shape, size, and color despite changes in angle, distance, and lighting.

Room

A defined space within a building or structure intended for occupancy or specific activities.