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:

Crude Oil

A natural, unrefined petroleum product composed of hydrocarbon deposits.

Tractors

Heavy farm vehicles designed for plowing, tilling, and planting, essential in modern agriculture for efficient large-scale farming.

Absolute Advantage

The ability of an individual, company, or country to produce a good or service at a lower cost than competitors.

Crude Oil

An unrefined, naturally sourced petroleum compound made of hydrocarbon collections and different organic elements.