Multiple Choice
Surplus Mining Company has leased a machine from Craft Machinery Company.The annual payments are $6,000 and the life of the lease is 8 years.It is estimated that the useful life of the machine is 9 years.How would Surplus Mining record the acquisition of the machine?
A) The machine would be recorded as an asset with a cost of $48,000.
B) The company would not record the machine as an asset but would record rent expense of $6,000 per year.
C) The machine would be recorded as an asset, at the present value of the annual cash payments, $6,000 for 8 years.
D) The machine would be recorded as an asset, at the present value of the annual cash payments, $6,000 for 9 years.
Correct Answer:
Verified
Correct Answer:
Verified
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